Home prices will continue to increase this year, albeit at a slower pace, as inventory is expected to remain tight and demand will continue to rise.
CoreLogic is projecting home values to increase 4.3% by next December, following a 6.6% year-over-year increase compared with one year ago.
Between December and January, when the data is analyzed, prices will have dropped a scant 0.4%, CoreLogic said.
"The number of homes for sale has remained very low," Frank Nothaft, chief economist for CoreLogic, said in a press release. "Job growth lowered the unemployment rate to 4.1% by year's end, the lowest level in 17 years. Rising income and consumer confidence has increased the number of prospective homebuyers. The net result of rising demand and limited for-sale inventory is a continued appreciation in home prices."
Of the nation's 100 largest markets, 35% had overvalued housing stock, 37% were appropriately valued and 28% were undervalued.
An overvalued housing market is defined as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued market is where prices are at least 10% below the sustainable level.
"Home prices continue to rise as a result of aggressive monetary policy, the economic and jobs recovery and a lack of housing stock. The largest price gains during 2017 were in five Western states: California, Idaho, Nevada, Utah and Washington," said Frank Martell, president and CEO of CoreLogic.
"As home prices and the cost of originating loans rise, affordability continues to erode, making it more challenging for both first-time buyers and moderate-income families to buy."