- The HPI Forecast indicates annual price growth will increase 5.2% by June 2020
- For two months, market conditions have stabilized with 38% of the top 100 markets considered overvalued
- Idaho, Utah and Nevada experienced the greatest year-over-year increases among states
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for June 2019, which shows 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. (May 2019 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results each month.)
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.”
The next CoreLogic HPI press release, featuring July 2019 data, will be issued on Tuesday, September 3, 2019 at 8:00 a.m. ET.
The CoreLogic HPI™ is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 40 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the CoreLogic HPI is designed to provide an early indication of home price trends by market segment and for the “Single-Family Combined” tier, representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties. The indices are fully revised with each release and employ techniques to signal turning points sooner. The CoreLogic HPI provides measures for multiple market segments, referred to as tiers, based on property type, price, time between sales, loan type (conforming vs. non-conforming) and distressed sales. Broad national coverage is available from the national level down to ZIP Code, including non-disclosure states.
CoreLogic HPI Forecasts™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, CoreLogic HPI Forecasts project CoreLogic HPI levels for two tiers — “Single-Family Combined” (both attached and detached) and “Single-Family Combined Excluding Distressed Sales.” As a companion to the CoreLogic HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, adverse and severely adverse scenarios at state, metro and ZIP Code levels. The forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index.
About the CoreLogic Consumer Housing Sentiment Study
In the second quarter of 2019, 508 Millennial renters and homeowners were surveyed by CoreLogic together with RTi Research. This study is a quarterly pulse of U.S. housing market dynamics. Each quarter, the research focuses on a different issue related to current housing topics. This first quarterly study concentrated on consumer sentiment within high-priced markets. The survey has a sampling error of +/- 3.1% at the total respondent level with a 95% confidence level.
About RTi Research
RTi Research is an innovative, global market research and brand strategy consultancy headquartered in Norwalk, CT. Founded in 1979, RTi has been consistently recognized by the American Marketing Association as one of the top 50 U.S. insights companies. The company serves a broad base of leading firms in Financial Services, Consumer Goods, and Pharmaceuticals as well as partnering with leading academic centers of excellence.
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