Last week we did a deep dive into updated foreclosure numbers released by global property analytic and real estate data provider, CoreLogic. This week we’ll examine their latest report, which deals with home price appreciation.
As with the foreclosure numbers, the news is overwhelmingly good. Home prices have risen consecutively for almost a full year now. And it still doesn’t look like we’ve reached the peak of the home price summit, though there are some troubling regional signs we’ll touch on later in this article.
CoreLogic reports that home prices in March, the most current month they have complete data on, are up year-over-year and month-over-month. Across the nation home prices climbed 6.7% higher year-over-year and 2.1% month-over-month, according to the CoreLogic Home Price Index.
“Housing helped keep U.S. economic growth afloat in the first quarter of 2016 as residential investment recorded its strongest gain since the end of 2012,” said Frank Nothaft, chief economist for CoreLogic. “Low interest rates and increased home building suggest that housing will continue to be a growth driver.”
Experts predict that the rise in home pricing will continue in the upcoming month. Again, CoreLogic provides us with some valuable insight. Their CoreLogic HPI Forecast predicts that home prices will actually rise an additional 5.3% over the next year, from March 2016 to March 2017. Even the month-over-month basis for home prices should increase 0.7% when the April numbers are confirmed and analyzed.
“Home prices reached the bottom five years ago, and since then have appreciated almost 40%,” said Anand Nallathambi, president and CEO of CoreLogic. “The highest appreciation was in the West, where prices continue to increase at double-digit rates.”
When taken as a whole, there’s no doubt that the real estate market remains strong on the national level. But zooming in on specific regions and even further on metropolitan areas, there are some potential signs of cooling. An unexpected drop in pending home sales in the West has some experts wondering if that region is in trouble, perhaps even at risk for locally contained bubbles.
“Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38% in the past three years,” said Lawrence Yun, National Association of Realtors chief economist, in regards to their latest pending home sales report.
Zillow’s Chief Economist Svenja Gudel commented further on the home sales report, “So far this year, much of the softness in national new home sales numbers has been driven by weakness in the West region. In both January and March, new home sales in the West fell more than 20% month-over-month. Some, but not all, of this slack has been picked up in other areas of the country: Over the year, new home sales are down 20.7% in the West, but up 15.4% in the South.”
While home prices remain extremely high in red-hot markets in the West like the entire Bay Area, the great Denver metropolitan area and much of Southern California, it may be due to the extremely limited supply and still record (some would say artificially) low mortgage rates. If either of those factors change, the West in particular could be in for a cooling off period.
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