CoreLogic® (NYSE: CLGX), Irvine, on Tuesday released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for August 2018, which shows home prices rose both year over year and month over month.
Home prices increased nationally by 5.5% year over year from August 2017. On a month-over-month basis, prices increased by 0.1% in August 2018.
Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 4.7% on a year-over-year basis from August 2018 to August 2019. On a month-over-month basis, home prices are expected to decrease by 0.4% from August to September 2018.
“The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The slackening in demand is reflected in the slowing of national appreciation, as illustrated in the CoreLogic Home Price Index. National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year.”
According to the CoreLogic Market Condition Indicators (MCI), an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 38% of metropolitan areas have an overvalued housing market as of August 2018. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued, by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals (such as disposable income). Additionally, as of August 2018, 18% of the top 100 metropolitan areas were undervalued, and 44% were at value. When looking at only the top 50 markets based on housing stock, 46% were overvalued, 12% were undervalued and 42% were at value.
August data indicates that, while home prices are cooling, they are still rising in most markets. Home sales are down in some metros, in part because sellers believe prices will continue to rise and that by waiting, they can sell their homes for a better price. Many intend to use proceeds from the sale of their current home to fund the down payment of their next home. 66% of homeowners who are considering buying in the next 10 years will need to sell their current homes to finance their next one. Meanwhile, 35% of recent home buyers said they used funds from the sale of their previous home to finance the down payment of their current home.
“In some markets, home buyers and sellers are remaining cautious and taking a pause as price appreciation continues to rise,” said Frank Martell, president and CEO of CoreLogic. “By waiting to sell, homeowners believe they will get the greatest return on their investment; the more money they have for a down payment, the easier the purchase payments will be for their next home.”
