Home Price Index Highlights: May 2021
- National home prices increased 15.4% year over year in May.
- Appreciation in Idaho topped 30% in May 2021, more than double the rate from May 2020.
Overall HPI Growth
National home prices increased 15.4% year over year in May 2021, according to the latest CoreLogic Home Price Index (HPI®) Report. The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices. While a pick-up in construction and an increase in for-sale listings as more homeowners get vaccinated may help moderate surging home price growth, affordability challenges may drive some potential home buyers out of the market which could reduce demand.
HPI Growth by Price and Property Type Tiers
CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price. Home price growth accelerated to their highest rates for the low-price, the low-to-middle price, the middle-to high price and the high-price tiers since 1976, 2005, 1976 and 1978 respectively. The lowest price tier increased 19.2% year over year in May 2021, compared with 17.6% for the low- to middle-price tier, 17.5% for the middle- to moderate-price tier, and 17.1% for the high-price tier. While appreciation was highest for lower-priced homes, the difference in appreciation rates for the four price tiers is converging, suggesting that supply is restricted at all prices levels.
CoreLogic also provides the HPI separately for detached — or freestanding — properties and attached properties (such as condos or townhouses). Appreciation of detached properties (17.2%) was almost double that of attached properties (9.1%) in May as prospective buyers continue to seek out more space.
Figure 2 shows the year-over-year HPI growth in May 2021 for the 5 highest- and lowest-appreciating states. While all states showed annual increases in HPI in May, appreciation was strongest in the West. Idaho posted annual appreciation of 30.3% in May, followed by Arizona with appreciation of 23.5%. At the low end, North Dakota and New York saw a home price increases of 5.6%. The surge in home price appreciation was felt across the country, with all states showing higher appreciation in May 2021 than in May 2020. Idaho had the biggest acceleration in home price growth from May 2020 to May 2021. An influx of buyers in search of relatively less expensive housing drove prices 18.2 percentage points higher over the year in Idaho.
In May 2021, home prices rose by rates not seen since 2005, and strong gains are expected to persist for much of this year. A supply shortage of homes for sale is a major factor in the surge in HPI growth. Affordability challenges may discourage potential buyers, and this could work to moderate home price increases by mid-2022. For more information on home price insights and trends, check out our latest HPI Report.
1 The four price tiers are based on the median sale price and are as follows: homes priced at 75% or less of the median (low price), homes priced between 75% and 100% of the median (low-to-middle price), homes priced between 100% and 125% of the median (middle-to-moderate price) and homes priced greater than 125% of the median (high price).
2 The CoreLogic HPI series begins in 1976.