Despite Coronavirus, U.S. Home Price Growth Accelerated in June
Based on CoreLogic's latest Home Price Index for June, U.S. home prices increased by 4.9% in June 2020, compared with June 2019. Month over month, home prices increased 1%, compared with May of this year, the fastest monthly gain for the month of June since 2013.
CoreLogic's HPI forecast predicts a modest decline in home prices over the twelve months ending June 2021. A sign of a solid foundation and resiliency in the housing market in the face of the pandemic, stronger home prices this summer reflect improved affordability, demographic demands, supply constraints and continued strong interest in purchasing a home. These factors combined to keep home prices steady despite the continued pressure of the pandemic and related economic fall-out.
"Mortgage rates hit record lows this spring, which enhanced affordability for home buyers," said Dr. Frank Nothaft, chief economist at CoreLogic. "First-time buyers, and millennials in particular, have jumped at the opportunity to achieve homeownership."
"Home price appreciation continues at a solid pace reflecting fundamental strength in demand drivers and limited for-sale inventory," said Frank Martell, president and CEO of CoreLogic. "As we move forward, we expect these price increases to moderate over the next twelve months. Given the economic outlook, housing remains a bright spot for the foreseeable future."
Despite the renewed pickup of national home price growth, the impact on local markets continues to fluctuate. For example, home prices in Philadelphia experienced an annual gain of 8.4% in June, driven by an uptick in New York City residents purchasing homes, likely in an effort to migrate from the coronavirus (COVID-19) hotspot. Meanwhile, affordability constraints in San Francisco led to an annual decline in home prices of 0.2%.
Looking forward, the HPI Forecast also reveals the disparity of home prices across metros. In markets like Las Vegas, where the local tourism economy and job market continue to suffer due to the pandemic, home prices are expected to decline 11.3% by June 2021. Meanwhile, in San Diego, home prices are forecasted to increase 4.2% over the next 12 months as lack of inventory continues to push prices up.
The CoreLogic Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts that metro areas with an elevated resurgence of COVID-19 cases--like Prescott, Arizona, and Lake Havasu, Arizona--are at the greatest risk (above 60%) of a decline in home prices over the next 12 months. Other metro areas with a high risk of price declines include Las Vegas, Nevada; Peoria, Illinois; and Worchester, Massachusetts.