Home prices continue to increase as national inventory levels remain low heading into August. But relief for buyers could be coming in the next 12 months.
Home prices increased 2.3% from May to June, and 17.2% year-over-year, according to the latest CoreLogic report on home prices. However, CoreLogic officials said price gains could slow to as low as a 3.2%-gain by this time next year, as ongoing affordability challenges deter potential buyers — as well as an uptick in new for sale listings.
“Home prices have been rising in the mid single-digits for some years now, and the recent surge to double digit price jumps reflect the convergence of exceptional demand persistent low supply,” said Frank Marshall, CoreLogic CEO and president. “Affordability will become a more acute issue for the foreseeable future.”
The 17.2% growth is the largest annual growth reported since 1979, as supply and demand pressures endure and construction costs continue to rise, said Frank Nothaft, CoreLogic’s chief economist. Low- and middle-income Americans, he said, are being impacted the most.
At the residential level, the COVID-19 pandemic sparked an increase in buyer desire for lower density neighborhoods and more living space, Nothaft said. This, he said, led to detached homes having the highest annual growth (+19.1%) in June since 1976.
“Communities with single-family detached houses fill the need [for more space],” Nothaft said.
May home prices also jumped 16.6% annually in the latest S&P CoreLogic Case-Shiller National Home Price Index report. Home prices in May stood at all-time highs in 18 of the 20 S&P cities surveyed, and five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – recorded their all-time highest 12-month gains.
Phoenix’s 25.9% increase led all cities for the 24th consecutive month in accelerating home prices, with San Diego (+24.7%) and Seattle (+23.4%) close behind. Prices were strongest in the West (+19.9%) and Southwest (+19.8%), but every region logged double-digit gains from April to May.