The newly released CoreLogic HPI for May shows that home prices held up very well in the United States. However, most of the home prices captured in the May report were from transactions negotiated in April or March since it takes on average 30 to 45 days to settle a transaction. Many states have entered different reopening phases since the beginning of May, and as a result housing market activity has increased. What does that mean for June or even July home prices?
CoreLogic has developed a Pending Price Index™ using MLS data. The index is built on the price recorded on the contract date rather than the price on the closing date. Since it takes generally 30 to 45 days to close a sale, contracts negotiated in May and June can be used to project June and July home prices, which will give insight about the ongoing housing market recovery. The latest CoreLogic Pending Index indicates annual price growth will likely slow in June and July.
The 20-CBSA composite home price year-over-year change is projected to be 4.3% in June, just slightly below what was reported by the CoreLogic HPI for May, 4.4%. Moreover, it is projected to continue to slow down to 4.1% in July (Figure 1).
Among all 20 CBSAs included in the CoreLogic Pending Index, Phoenix leads the way with a 7.8% year-over-year projected growth in July, compared to a pre-COVID 8.2% year-over-year growth in March (Figure 2). With lean inventory and rising demand, home price growth in California was picking up pre-pandemic. However, the acceleration was interrupted by COVID-19. Both Los Angeles (4.0%) and San Diego (4.5%) are expected to have slower home price growth in July. San Francisco’s home price growth is projected to effectively end by July, compared to 3.7% growth prior to COVID-19. Las Vegas and Detroit are among places hit hardest by COVID-19 and their annual growth has slowed by 1.6% and 2.8% respectively from March. The sole bright spots are some of the Southeast metros: Tampa, Charlotte and Atlanta’s home prices have held up very well since the pandemic began.
© 2020 CoreLogic, Inc., All rights reserved.