August home price growth slows, especially at low end of market
Millennials — now more than ever — dictate the direction the housing market is moving in, and with the deceleration of starter home prices, more should become homeowners soon, according to CoreLogic.
"The millennial cohort has now entered the housing market in force and is already driving major changes in buying and selling patterns," Frank Martell, president and CEO of CoreLogic, said in a press release. "Almost half of the millennials over 30 years old have bought a house in the last three years. These folks are increasingly looking to move out of urban centers in favor of the suburbs, which offer more privacy and a greener environment. Perhaps most significantly, almost 80% of all millennials are confident they will become homeowners in the future."
Annual price appreciation was expected to decelerate in August, but it did so more sharply than CoreLogic anticipated in its forecast a year ago, when it estimated there would be a 4.7% gain during the month. Instead, home prices increased nationally by 3.6% annually and by 0.4% over a revised result for July; CoreLogic incorporates newly released public data and updates its findings each month.
Over the past six months, annual growth ranged from 3.2% to 3.6%. The Home Price Index forecasts a 0.3% month-to-month increase into September and a 5.8% growth rate for August 2020.
"While the slowdown in appreciation occurred across the country at all price points, it was most pronounced at the lower end of the market," said Frank Nothaft, chief economist at CoreLogic. "Prices for the lowest-priced homes increased by 5.5%, compared with August 2018, when prices increased by 8.4%. This moderation in home-price growth should be welcome news to entry-level buyers."
Broken down by the largest 100 metropolitan statistical areas in the nation by housing stock, 37% of homes were overvalued in August, while 23% were undervalued and 40% were at value. When cut down to the top 50 largest MSAs, 40% were overvalued, just 16% were undervalued and 44% were at value.
Idaho once again led all states with an 11.6% annual price growth, followed by Utah's 8% and Maine's 6.9%. Connecticut was the only state where home prices depreciated.