With buyers scrambling for homes on anticipated mortgage rate growth, house values continued to rise at the start of the year, making entry-level homes even less attainable, according to CoreLogic.
Home prices increased 6.6% year-over-year in January, and are projected to appreciate another 4.8% from January 2018 to January 2019.
"Entry-level homes have been in particularly short supply, leading to more rapid home-price growth compared with more expensive homes," Frank Nothaft, chief economist for CoreLogic, said in a press release.
"Homes with a purchase price less than 75% of the local area median had price growth of 9% during the year ending January 2018. Homes that sold for more than 125% of median appreciated 5.3% over the same 12-month period. Thus, first-time buyers are facing acute affordability challenges in some high-cost areas," he continued.
Nearly half of the nation's 50 largest metropolitan areas are overvalued, making entry-level homes especially difficult to afford in these areas. And with tightness in the entry-level market expected to continue, millennials may continue facing affordability challenges through 2019, when much of that generation reaches its prime years for home buying.
Washington and Nevada saw the greatest annual growth in home values, with prices in the two states rising nearly double the nation's average rate of appreciation. Home values in Washington increased 12.1% in January from the previous year, and rose 11.3% in Nevada.
House values grew the least in Alaska and Delaware, where they both increased 0.7%. All states and the District of Columbia saw year-over-year increases in home prices.