July home prices surge, but projected to drop off in 2021: CoreLogic
Price appreciation shot up 5.5% annually in July — the highest growth rate since August 2018 — and 1.2% month-over-month, according to CoreLogic's Home Price Index. While June fell short of last year's prediction, July exceeded the 5.4% annual growth projection.
July's annual increase was an uptick from the respective year-ago price growth rate of 3.6% as well. With so much uncertainty for 2021 given the upcoming election and coronavirus-related unknowns, the data provider predicts prices will inch up 0.1% into August and 0.6% by July 2021. After bottoming out in March 2011 the wake of the housing crash, the HPI rose on an annual basis every month since February 2012.
"On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic. A long period of record-low mortgage rates has opened the floodgates for a refinancing boom that is likely to last for several years," Frank Martell, president and CEO of CoreLogic, said in the report. "In addition, after a momentary COVID-19-induced blip, purchase demand has picked up, driven by low rates and enthusiastic millennial and investor buyers. Spurred on by strong demand and record-low mortgage rates, we expect to see more homebuilding in 2021 and beyond, which should help support a healthy housing market for years to come."
Without exception, every state posted annual increases in average home prices. Idaho continues to boast the country's top growth rate, jumping 9.8% from July 2019, followed by 9.1% in Maine, and 9% in Arizona. New York sat at the other pole, only rising 1.1%, followed by 1.5% in Illinois and 2.1% in Hawaii.
Among 10 of the largest metro areas, Washington, D.C., again increased the most annually, growing 5.3%, with San Diego trailing at 5.2% and Los Angeles at 4.7%.
Looking ahead, certain housing markets face heightened risks of price declines, based on their tourism dependence, susceptibility to COVID-19 resurgence, or current migratory trends away from dense populations. CoreLogic pegged Las Vegas, Miami, Prescott, Ariz., Lake Charles, La., and Huntington, W.V., for having the highest chances of home price drops by July 2021.