Home price growth slowed in October, spike expected next year
October's deceleration in housing values could be followed by acceleration in 2020, but a growing subset of millennials nevertheless plan to become homeowners in the new year, according to CoreLogic.
"Nationally, over the past year, home prices are up 3.5% with the rate of growth accelerating from September into October," Frank Martell, president and CEO of CoreLogic, said in a press release. "We expect home prices to rise at least another 5% over the next 12 months. Interestingly, this persistent increase in home prices isn't deterring older millennials. In fact, 25% of those surveyed anticipate purchasing a home over the next six to eight months."
While price appreciation as measured by CoreLogic's home price index rose 3.5% year-over-year in October and increased 0.5% month-over-month, the year-over-year gain was more meager than October 2018's 5.4%. October 2019 marked the 16th consecutive month the year-over-year price growth was below 6%. Home prices are projected to increase by 0.2% on a consecutive-month basis in November of this year and return to a 5.4% annual growth rate by October 2020.
Although national home price growth is expected to pick up next year, there also will likely be some local areas where more depreciation will set in.
"Local home-price growth can deviate widely from the change in our U.S. index," said Frank Nothaft, chief economist at CoreLogic. "While we saw prices up 3.5% nationally last year, home prices also declined in 22 metropolitan areas. Price softness occurred in some high-cost urban areas and in metros with weak employment growth during the past year."
Broken down by the largest 100 metropolitan statistical areas in the nation by housing stock, 35% of homes were overvalued in October, while 27% were undervalued and 38% were at value. When that list was 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 once again led the way with a 10.9% annual price growth, followed by Maine's 7.5% and Indiana's 7.1%. Connecticut posted the lowest annual change in HPI with a flat 0% appreciation.