Annual home price growth expected to pick up after December slowdown
While down from the year before, December's housing value appreciation kept churning and should climb in 2020 to a new all-time high, according to CoreLogic.
Price appreciation as measured by CoreLogic's Home Price Index grew 4% year-over-year in December and increased 0.3% month-over-month. Though the annual gain fell from 4.7% the year before, it is expected to rise 5.2% in December 2020.
December 2019 marked the 18th straight month of annual price growth below 6%. Anticipated growth for January 2020 should stay flat, only projected at 0.1%. Even with that modest appreciation, the overall median home price would reach a new peak, besting the last recorded peak in April 2006.
"On a national level, home prices are on an upswing," Frank Martell, president and CEO of CoreLogic, said in a press release. "Price growth is likely to accelerate in 2020. And while demand for homeownership has continued to increase for millennials, particularly those in their 30s, 74% admit they have had to make significant financial sacrifices to afford a home. This could become an even bigger factor as home prices reach new heights during 2020."
Due to inventory restrictions and varied demand for different types of homes, prices in the lower end of the housing market grew at a greater rate than the more expensive end. And of course, price appreciation fluctuates across the country.
"Moderately priced homes are in high demand and short supply, pushing up values and eroding affordability for first-time buyers," said Frank Nothaft, chief economist at CoreLogic. "Homes that sold for 25% or more below the local median price experienced a 5.9% price gain in 2019, compared with a 3.7% gain for homes that sold for 25% or more above the median."
Broken down by the largest 100 metropolitan statistical areas in the nation by housing stock, 34% of homes were overvalued in December, while 26% were undervalued and 40% were at value. When cut down to the top 50 largest MSAs, 40% were overvalued, just 20% were undervalued and 40% were at value.
At the state level, Idaho again stayed ahead of the rest with a 9.9% annual price growth, followed by Maine at 7.9% and Wyoming at 7.7%.