Home prices nationwide accelerated on an annual basis by 4.0 percent in January according to CoreLogic's Home Price Index (HPI). Annual appreciation has been trending higher since May as falling interest rates fueled demand. Month-over-month gains slowed to 0.1 percent in January, down from an 0.3 percent increase in December and 0.5 percent in November.
CoreLogic's chief economist Dr. Frank Nothaft said, "January marked the third consecutive month that annual home price growth accelerated in our national index, as low mortgage rates and rising income supported home sales. In February, mortgage rates fell to the lowest level in more than three years, which likely will spur additional home shopping activity and price appreciation."
The states with the highest increases year-over-year were Idaho (10.5 percent), South Dakota (9.3 percent) and Missouri (7.6 percent.) Connecticut was the only state to post a decline.
"Despite a slowdown in home price growth last summer, annual appreciation is beginning to stabilize," according to Frank Martell, CoreLogic President and CEO. "While just under half of millennials feel confident they can afford to purchase a home, housing starts have shot up, and mortgage rates have come down, which has helped improve affordability and spur overall housing demand."
The company is forecasting that its HPI will increase by 5.4 percent over the 12-month period ending in January 2021. On a month-over-month basis, home prices are expected to increase by 0.2 percent from January 2020 to February 2020. The CoreLogic HPI Forecast is a projection of home prices 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.
CoreLogic says that, of the nation's 100 largest metropolitan areas based on housing stock, 33 percent of that stock was overvalued as of January 2020. Twenty-nine percent of those metros had undervalued stock and 38 percent were at value. CoreLogic Market Conditions Indicators (MCI) defines an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level as supported by employment, median income, and other factors. An undervalued housing market is one in which home prices are at least 10 below the sustainable level. Looking at the top 50 markets, 38 percent were overvalued, 24 percent were undervalued, and 38 percent were at value.
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