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The Week Ahead: Will Record Home Price Gains Continue?

homebuyers confidenceOn Tuesday, August 3, the latest CoreLogic HPI and HPI Forecasts will be unveiled, tracking home-price valuation information, culled from real-estate public records, servicing, and securities databases.

Gauging home-price movements, CoreLogic’s data sets will examine the close of Q2 in the housing market.

Last month, national home prices increased 15.4% year-over-year in May 2021, according to CoreLogic Home Price Index (HPI) Report. The May 2021 HPI gain was up from the May 2020 gain of 4.2%, marking the highest year-over-year gain since November 2005.

A supply shortage of homes for sale played a major factor in the surge in HPI growth last month. However, affordability challenges may discourage potential buyers, which could work to moderate home price increases by mid-2022.

With mortgage rates on the rise, yet still below the 3% mark, the aforementioned affordability concerns remain a struggle for many on the fence in the homebuyer market.

“Declining affordability may cause potential homebuyers on the margin to be priced out, prompting fewer or less intense bidding wars, and causing house price appreciation to moderate,” said Mark Fleming, Chief Economist at First American. “The increase in housing inventory may likewise ease pressure on nominal house price growth, though the increase remains small relative to historic levels and the broader housing supply shortage is likely to take years to reverse. Affordability trends in the coming months will depend on the supply and demand dynamics behind nominal house price appreciation—dynamics which will play out differently in each market.”

Further compounding affordability issues are the lingering supply and materials concerns, as the National Association of Home Builders (NAHB) reported that changes in prices for softwood lumber products that occurred between April 17, 2020 and July 8, 2021 have added $29,833 to the price of an average new single-family home.

Click here for more information on CoreLogic’s upcoming Home Price Index (HPI) Report.

Here's what else is happening in The Week Ahead:

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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