July's home sales growth squeezes inventory and bumps up prices
Strong home purchase activity — especially by millennials — pushed up annual price appreciation in July after a disappointing June, according to CoreLogic.
While falling short of the last year's forecast, home prices increased nationally by 3.6% year-over-year and by 0.5% over a revised result for June; CoreLogic incorporates newly released public data and updates its findings each month. CoreLogic projects home prices will increase by 0.5% into August and 5.4% by July 2020.
"A growing number of millennials are expressing an interest in buying homes, reinforcing the theory that this cohort is continuing to engage within the housing market," Frank Martell, president and CEO of CoreLogic, said in a press release. "But, with so few homes available for sale, the imbalance has created an affordability crisis that is getting worse every day. Demand exceeds supply and we’re unsure of when the two will balance out."
About 26% of millennial respondents to a second-quarter CoreLogic consumer survey said they're interested in buying a home within the next 12 months.
Broken down by the largest 100 metropolitan statistical areas in the nation by housing stock, 37% were overvalued in July, 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.
"Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income," said Frank Nothaft, chief economist at CoreLogic. "With the for-sale inventory remaining low in many markets, the pickup in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year."
Idaho again led all states with an 11.5% annual price growth, the only one in the double digits, followed by Utah and Maine. South Dakota and Connecticut were the only states posting annual depreciation, down 3.4% and 0.3%, respectively.