The CoreLogic® (NYSE: CLGX) Home Price Index (HPI) and HPI Forecast for September 2019, out Tuesday, shows home prices rose both year over year and month over month. Home prices increased nationally by 3.5% from September 2018. On a month-over-month basis, prices increased by 0.4% in September 2019.

Home prices continue to increase on an annual basis with the CoreLogic HPI Forecast, indicating annual price growth will increase 5.6% by September 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.3% from September 2019 to October 2019.

“Mortgage rates were a full percentage point lower this September compared to a year ago, boosting affordability for first-time buyers and supporting a rise in homeownership,” said Dr. Frank Nothaft, chief economist at CoreLogic. “In addition to lower interest rates, personal income grew faster than home prices during the past year. This provided an additional lift for first-time buyer affordability and helped to boost the homeownership rate to the highest level in more than five years.”

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, 36% of metropolitan areas have an overvalued housing market as of September 2019. 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. As of September 2019, 23% of the top 100 metropolitan areas were undervalued, and 41% were at value.

In the top 50 markets based on housing stock, 40% were overvalued, 16% were undervalued and 44% were at value in September 2019, unchanged from August 2019. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10% below the sustainable level.

During the second quarter of 2019, CoreLogic, together with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment among millennials. The survey revealed that millennials are not particularly confident with their personal finances — nor the U.S. economy — compared to older generations. But, contrary to this lack of confidence, one in five millennials perceive buying a home as affordable, which is more optimistic compared to their older counterparts. Still, 42% of older millennials (30-38) said they spent more on their home purchase than expected, with new home buyers in this demographic spending an average of $383,000 on a home. This may be a factor that has caused initial down payments to be sourced from savings. In fact, the average home buyer in this cohort put a 16% down payment on their home, with nearly half of those funds coming from a 401(k) or retirement account.

“All 50 states posted positive home price trends in September with the average price nationally rising 3.5%,” said Frank Martell, president and CEO, CoreLogic. “As a group, more millennials are entering the home-buying market and they report spending more money than they anticipated. This may impact their future financial planning. Millennials age 30-38 put down less than 20% for a down payment over the past three years and used funds from their retirement accounts to cover an average of 7% of that down payment.”