- CoreLogic Home Price Index recorded highest annual growth since 2006 in February at 10.4%
- Affordability challenges push homebuyers away from high-cost metro areas as spring homebuying season looms
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 February 2021.
Home prices continued to increase in February, reaching the highest annual gain since April 2006, as demand continues to clash with historically low supply. These factors have created increased affordability challenges, especially as mortgage rates also begin to rise.
CoreLogic analysis also shows homebuyers have steadily moved away from densely populated, high-cost coastal areas in favor of more affordable suburban locales. The number of homebuyers in the top 10 metros with the largest net out-migration — including West Coast metros like Los Angeles, San Francisco and San Jose — who chose to move to another metro increased by 3 percentage points in 2020 to 21% from 2019. This sentiment is reflected in CoreLogic’s recent consumer survey, which found that 57% of current non-homeowners on the West Coast feel the home options in their area are not at all affordable.
“Homebuyers are experiencing the most competitive housing market we’ve seen since the Great Recession,” said Frank Martell, president and CEO of CoreLogic. “Rising mortgage rates and severe supply constraints are pushing already-overheated home prices out of reach for some prospective buyers, especially in more expensive metro areas. As affordability challenges persist, we may see more potential homebuyers priced out of the market and a possible slowing of price growth on the horizon.”
- Nationally, home prices increased 10.4% in February 2021, compared with February 2020. On a month-over-month basis, home prices increased by 1.2% compared to January 2021.
- Home prices are projected to increase 3.2% by February 2022. Increased inventory as the pandemic wanes, coupled with affordability concerns that may discourage potential homebuyers, could lead to a slowdown in home price growth by the end of 2021.
- Metro areas where affordability constraints are prevalent continue to persist as prices rise. For instance, in February, home prices increased 16.2% year over year in Phoenix, 12.5% in Seattle and 8.2% in Los Angeles.
- At the state level, Idaho, Montana and South Dakota had the strongest price growth in February, up 22.6%, 19.5% and 17.1%, respectively.
“The run-up in home prices is good news for current homeowners but sobering for prospective buyers,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Those looking to buy need to save for a down payment, closing costs and cash reserves, all of which are much higher as home prices go up. Add to that a rise in mortgage rates and the affordability challenge for first-time buyers becomes even greater.”
The next CoreLogic HPI press release, featuring March 2021 data, will be issued on May 4, 2021 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 45 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, metropolitan areas and ZIP Code levels. The forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index.
About Market Risk Indicator
Market Risk Indicators are a subscription-based analytics solution that provide monthly updates on the overall “health” of housing markets across the country. CoreLogic data scientists combine world-class analytics with detailed economic and housing data to help determine the likelihood of a housing bubble burst in 392 major metros and all 50 states. Market Risk Indicators is a multi-phase regression model that provides a probability score (from 1 to 100) on the likelihood of two scenarios per metro: a >10% price reduction and a ≤ 10% price reduction. The higher the score, the higher the risk of a price reduction.
About the Market Condition Indicators
As part of the CoreLogic HPI and HPI Forecasts offerings, Market Condition Indicators are available for all metropolitan areas and identify individual markets as “overvalued”, “at value”, or “undervalued.” These indicators are derived from the long-term fundamental values, which are a function of real disposable income per capita. Markets are labeled as overvalued if the current home price indexes exceed their long-term values by greater than 10%, and undervalued where the long-term values exceed the index levels by greater than 10%.
About the CoreLogic Consumer Housing Sentiment Survey
In February 2021, 3,699 adults in the U.S., with an estimated 1,020 non-homeowners and 2,679 current homeowners, were surveyed by CoreLogic through survey platform YouGov. The survey provides a pulse on U.S. housing market dynamics and purchase intentions. Fieldwork was undertaken between February 16-22, 2021. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).
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