Data regarding home prices reflected an upward trend in October, according to CoreLogic’s Home Price Index and HPI Forecast released on Tuesday. The report found that home prices surged nationally by 5.4 percent year over year and reflected an increase of 0.5 percent on a month-over-month basis, in October 2018.
For the year ahead, the report indicated that home prices are projected to increase by 4.8 percent on a year-over-year basis by October 2019. However, the month-over-month basis will see a decline by 0.7 percent from October to November 2018, it noted.
Frank Nothaft, Chief Economist at CoreLogic stated that home buyer activity will reduce “due to rising prices and interest rates, which will lead to a gradual slowing in appreciation.”
October's mortgage rates were the highest in seven and a half years, eroding buyer affordability. Despite higher interest rates, many renters view a home purchase as a way to build wealth through home-equity growth, especially in areas where rents are rising quickly. These include the Phoenix, Las Vegas and Orlando metro areas, where the CoreLogic Single-Family Rent Index rose 6 percent or more during the last 12 months,” Nothaft said.
North Dakota was the only state to show a year-over-year decline in prices this month, while West Virginia, Nevada, and Idaho showed double-digit growth.
CoreLogic’s analysis based on housing stock found that 35 percent of metropolitan areas have an overvalued housing market as of October 2018, in the 100 largest metropolitan areas surveyed. Additionally, as of October 2018, 24 percent of the top 100 metropolitan areas were undervalued, and 41 percent were at value.
CoreLogic indicated that renters still want to pursue the dream of owning a home despite high prices.
“Our research found that being a homeowner makes consumers feel safe in their homes. Renters really want something to call their own. However, until affordability comes back into balance, renters will have a hard time purchasing a home,” said Frank Martell, President, and CEO of CoreLogic.
Read the full report here.