Home prices rose in June, but they’ll likely fall in 2021: CoreLogic
Price appreciation jumped 4.9% annually in June and 1% month-over-month, according to CoreLogic's Home Price Index. While falling short of the 5.2% bump predicted a year ago, it was the highest growth rate for the month of June since 2013.
June’s annual increase was also a gain from the respective year-ago price growth rate of 3.6%. With the coronavirus negatively impacting the economy, the data provider predicts prices to climb only 0.1% into July and to fall 1% by June 2021. Since bottoming out in March 2011, the HPI grew 68.3% and rose on an annual basis every month since February 2012.
"Home price appreciation continues at a solid pace reflecting fundamental strength in demand drivers and limited for-sale inventory," Frank Martell, president and CEO of CoreLogic, said in a press release. "As we move forward, we expect these price increases to moderate over the next twelve months. Given the economic outlook, housing remains a bright spot for the foreseeable future."
Record-low mortgage rates played a major part in keeping the housing market strong. Because they hover at a historic nadir, more millennials look to take advantage of them. Meanwhile, affordability rose to the highest point since 2016 despite the steady price growth.
With the exception of South Dakota declining 1.1%, every state posted annual increases in average home prices. Idaho's 10.5% growth led the nation, followed by 9.8% in Montana, and 8.5% in both Arizona and Missouri. Among the 10 largest metro areas, Washington, D.C. grew the most annually at a 4.8% rate, trailed by 4.5% in San Diego and 4.4% in Houston. Only San Francisco prices regressed, edging down 0.2%.
Housing markets heavily reliant on entertainment, tourism and hospitality are forecast to have hardships going ahead to next year. CoreLogic expects Las Vegas home prices to drop 11.3% by June 2021, while places like Lake Havasu, Ariz. — where coronavirus cases have resurged most — face the greatest risk of falling housing values.