Idaho, Utah and Nevada experienced the greatest year-over-year increases
According to CoreLogic's latest Home Price Index for June 2019, U.S. home prices rose both year over year and month over month. Home prices increased nationally by 3.4% from June 2018. On a month-over-month basis, prices increased by 0.4% in June 2019.
Single-family home prices stand at an all-time high and continue to increase on an annual basis, with the CoreLogic HPI Forecast indicating annual price growth will increase by 5.2% from June 2019 to June 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.5% from June 2019 to July 2019. The CoreLogic HPI Forecast is a projection of home prices calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
"Tepid home sales have caused home prices to rise at the slowest pace for the first half of a year since 2011," said Dr. Frank Nothaft, chief economist at CoreLogic. "Price growth continues to be faster for lower-priced homes, as first-time buyers and investors are both actively seeking entry-level homes. With incomes up and current mortgage rates about 0.8 percentage points below what they were one year ago, home sales should have a better sales pace in the second half of 2019 than a year earlier, leading to a quickening in price growth over the next 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 June 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 June 2019, 24% 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, 42% were overvalued, 16% were undervalued and 42% 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.
During the second quarter of 2019, CoreLogic together with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment among various millennial age cohorts. The study found home-price increases in lower-cost homes disproportionately impact older millennials (ages 30 - 39). Additionally, this cohort is significantly more active in searching for a new home than any other age group. Nearly half (45%) say they purchased a home in the past three years, while 25% say they will likely do so within the next year. While affordability concerns drive older millennials toward renting, they have more positive market perceptions than older generations and 37% say purchasing a home within their market is at least somewhat affordable.
"Millennial homebuyers are no longer a trend on the industry horizon. In fact, they are the new, first-time homebuyers of today. However, only about half of recent millennial buyers were satisfied with the number of options of available homes in their market or price range," said Frank Martell, president and CEO of CoreLogic. "Affordable housing continues to be a growing issue. A deeper look at the data shows that 43% of those surveyed indicated they couldn't afford to buy a new home or are concerned they won't be able to."