Home prices chill out at start of year, but will likely pick up steam
Home price appreciation lost some steam as buyers battling tight inventory and rising housing costs pulled back from the market, according to CoreLogic. But a competitive spring purchase season is still ahead, and property values are likely to grow again.
Since hitting a 2018 peak of 6.6% back in April, annual price appreciation has either slowed or remained steady, according to CoreLogic's home price index. House values grew 4.4% year-over-year in January.
"The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth," Frank Nothaft, chief economist for CoreLogic, said in a press release.
"Fixed mortgage rates have dropped 0.6 percentage points since November 2018 and today are lower than they were a year ago. With interest rates at this level, we expect a solid home buying season this spring," he said.
For 2019, the annual average home price is likely to reach 3.4% above last year's level, according to CoreLogic projections. On a monthly basis, however, they're expected to dip down 0.9% between January and February.
Acceleration in home price growth for the year will likely be due to a strengthened economy.
"The slowing growth in home prices was inevitable in many respects as buyers pull back in the face of higher borrowing and ownership costs,” said Frank Martell, president and CEO of CoreLogic.
"As we head into 2019, we can expect continued strong employment growth and rising incomes which could support a reacceleration in home-price appreciation later this year," he added.