Home prices in February rose 6.7 percent year over year and inched up 1 percent since last month as experts on Tuesday forecasted continued increases throughout 2018, according to real estate analytics firm CoreLogic in its latest Home Price Index (HPI) and HPI Forecast.
The 1-percent increase marks the seventh-consecutive month of growth for home prices nationwide, but, given rising mortgage rates and overvalued markets along the West Coast, CoreLogic Chief Economist Dr. Frank Nothaft on Tuesday predicted a 4.7-percent rise by February 2019 — a modest adjustment from forecasts of a 4.8 percent spike made last month.
“A number of western states have had hot housing markets,” said Nothaft in a prepared statement. “Idaho, Nevada, Utah and Washington all had home prices up more than 11 percent over the last year. With the recent rise in mortgage rates, affordability has fallen sharply in these states. We expect home-price growth to slow over the next 12 months, dropping to 5 to 6 percent in Idaho, Utah and Washington, and slowing to 9.6 percent in Nevada.”
Among the top 50 markets tracked by CoreLogic, 48 percent were considered overvalued in February, with Nevada, California and Washington leading the way in year-over-year growth. However, all 50 states recorded year-over-year price increases. Thirty percent of the top 100 metropolitan areas were undervalued and 36 percent were at value, according to the report.
“Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new homebuyers,” CoreLogic President and Chief Executive Frank Martell said in a prepared statement. “CoreLogic’s Market Conditions Indicator has identified nearly one-half of the 50 largest metropolitan areas as overvalued. Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth.”
About the CoreLogic HPI
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.