In October, home prices increased by 7% year-over-year for the second consecutive month, according to CoreLogic's Home Price Index. From September to October, home prices rose by 0.9%.
"Single-family residential sales and prices continued to heat up in October," said Frank Nothaft, chief economist for CoreLogic, in a press release. "On a year-over-year basis, home prices grew in excess of 6% for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy."
Home prices are starting to outpace home values, as 50% of the nation's top 50 markets based on housing stock were overvalued in October. Only 14% of the top markets were undervalued, and 37% were at value.
This rapid growth in home prices is not necessarily a bad thing, according to Frank Martell, president and CEO of CoreLogic.
"The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk," said Martell in a press release.
"However, for entry-level renters and first-time home buyers, it leads to tougher affordability challenges. According to the CoreLogic Single-Family Rent Index, rents paid by entry-level renters for single-family homes rose by 4.2% from October 2016 to October 2017 compared with overall single-family rent growth of 2.7% over the same time," he continued.
In 2018, home prices are projected to increase another 4.2% year-over-year from October. On a month-over-month basis, home prices are expected to decrease by 0.2% from October 2017 to November 2017, according to CoreLogic.