CoreLogic® (NYSE:CLGX) today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for November 2018, which shows home prices rose both year over year and month over month but also that gains continue to slow.
Home prices increased nationally by 5.1% year over year from November 2017. On a month-over-month basis, prices increased by 0.4% in November 2018.
Looking ahead, the CoreLogic HPI Forecast indicates home prices will increase by 4.8% on a year-over-year basis from November 2018 to November 2019. On a month-over-month basis, home prices are expected to decrease by 0.8% from November to December 2018.
“The rise in mortgage rates has dampened buyer demand and slowed home-price growth,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Interest rates for new 30-year fixed-rate loans averaged 4.9% during November, the highest monthly average since February 2011. These higher rates and home prices have reduced buyer affordability. Home sellers are responding by lowering their asking price, which is reflected in the slowing growth of the CoreLogic Home Price Index.”
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 November 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 November 2018, 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, 44% were overvalued, 18% were undervalued and 38% were at value. 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.
In 2018, CoreLogic together with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment, combining consumer and property insights. The study assessed attitudes toward homeownership and the driving force behind the decision to buy or rent a home. When homeowners were asked why they felt their home was increasing in value, they cited desirable location and improving local and national economies. As the country enters a new year, the state of these economic conditions will continue to impact attitudes toward homeownership and perceived property values.
“A strong economy helps homeowners feel confident about the value of their property,” said Frank Martell, president and CEO of CoreLogic. “If recent declines in the stock market shakes consumer confidence in the national economy, we may see homeowners’ perception of home value change and a subsequent buyers’ market emerge in 2019.”