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Lack Of Supply, Economic Rebound Fuel Surge
KEY TAKEAWAYS
- Low- and middle-income Americans face increasing affordability challenges
- Gains projected to slow as prices deter some homebuyers
Home prices nationwide rose 17.2% in June 2021 from a year earlier, the largest annual growth since 1979, CoreLogic said today.
The company, a leading global property information, analytics and data-enabled solutions provider, released its CoreLogic Home Price Index and HPI Forecast for June. It said that despite the economic ups and downs brought on by the pandemic, the housing market is still going strong.
As supply-and-demand pressures endure and construction costs spiked, home prices soared, the company said. While affordability challenges intensified, low mortgage rates, rising savings and an improving labor market help keep homeownership within reach for many prospective buyers. CoreLogic also projected that home price gains may slow over the next 12 months as demand moderates and for-sale inventory rises.
Home prices have been rising in the mid-single digits for some years now, but the recent double-digit price jumps "reflect the convergence of exceptional demand and persistent low supply,” said Frank Martell, president and CEO of CoreLogic. “With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future.”
On a month-over-month basis, home prices increased 2.3% in June from May, CoreLogic said.
Prices rose sharply in the West, with Twin Falls, ID, experiencing the highest year-over-year increase at 40.12%, followed by Bend, Ore., with a 35.4% increase.
Idaho and Arizona continued to have the strongest year-over-year price growth at 34.2% and 26.1%, respectively. Montana had a 24.3% year-over-year increase as homebuyers continued to seek more affordable locations with lower population density due to the pandemic.
"The pandemic sparked an increase in buyer desire for lower-density neighborhoods and more living space — both inside and outside their home," said Dr. Frank Nothaft, chief economist at CoreLogic. "Communities with single-family detached houses fill this need. Detached homes had the highest annual growth in June since the inception of the CoreLogic Home Price Index in 1976."
To read the full report, click here.
