CoreLogic's® (NYSE: CLGX) Home Price Index (HPI) and HPI Forecast for January 2019, released Tuesday, show home prices rose both year over year and month over month, though the former was the slowest rate since August, 2012.

Home prices increased nationally by 4.4% year over year from January 2018. On a month-over-month basis, prices increased by 0.1% in January 2019.

Looking ahead, the CoreLogic HPI Forecast indicates that the 2019 annual average home price will increase 3.4% above the 2018 annual average. On a month-over-month basis, home prices are expected to decrease by 0.9% from January 2019 to February 2019.

“The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Fixed-rate mortgage rates have dropped 0.6%age points since November 2018 and today are lower than they were a year ago. With interest rates at this level, we expect a solid home-buying season this spring.”

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, 35% of metropolitan areas have an overvalued housing market as of January 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). Additionally, as of January 2019, 27% of the top 100 metropolitan areas were undervalued, and 38% were at value.

When looking at only the top 50 markets based on housing stock, 40% were overvalued, 18% were undervalued and 42% were at value in January 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.

“The slowing growth in home prices was inevitable in many respects as buyers pull back in the face of higher borrowing and ownership costs,” said Frank Martell, president and CEO of CoreLogic. “As we head into 2019, we can expect continued strong employment growth and rising incomes which could support a reacceleration in home-price appreciation later this year.”