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CoreLogic will releases its monthly Home Price Index report on on Tuesday, September 3, after June’s report showed home prices rebounded.
The report states that homes priced 25% below the median price in their market with homes priced 25% above the average, the less expensive homes have seen prices increases twice as fast through June.
Causes for the imbalance, according to CoreLogic, are a reduced supply and increased demand for the lowest-priced homes. The result is a low month’s supply for sale for the less expensive homes, or home that entry-level buyers and investors are looking for.
“In part, these trends reflect existing homeowners staying in their homes longer, thereby reducing the flow of homes listed for sale, and increasing numbers of millennials beginning to purchase their first home, accelerating demand for starter homes,” the report states.
Making matters worse is that more people are looking to buy entry-level homes, whether they are first first-time buyers or investors.
From 1999 to 2003, investors were 10.7% of the buyers of entry-level homes. This number has increased to 19.2% between 2015-2019. Also, the report states that from 1999-2003 3.8% of entry-level sales were new construction, but that has fallen to 1.8% between 2015-2019.
CoreLogic states the lack of new-build supply for lower-priced homes has occurred throughout the U.S. In four metros that had a large number of new-home sales over the past year—Dallas, Phoenix, Atlanta, and Orlando—new construction added at least 20% to supply of higher-priced home, but just 3% of lower-priced homes.
“Limited supply and rising demand for lower-priced homes, relative to premium-priced homes, explains much of the difference in price growth,” the report states.
CoreLogic also reported in its latest Case-Shiller Home Price Index that home prices grew annually 3.1% in June, which is a slight decline from 3.3% the month prior.
Also falling were price gains in 10-city composite, which dropped from 2.2% to 1.8% in June. The 20-city composite posted a 2.1% annual gain, down from 2.4% the prior month.
Here's what else is happening in The Week Ahead:
Federal Reserve Beige Book (Sept. 4)
Ellie Mae Millennial Tracker (Sept. 4)
BLS Employment Date (Sept. 6)
