by Calculated Risk on 9/07/2021 08:00:00 AM
Notes: This CoreLogic House Price Index report is for July. The recent Case-Shiller index release was for June. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).
With mortgage rates remaining near record lows, the ongoing challenges of persistent demand and constricted supply continue to put upward pressure on home prices. A recent CoreLogic survey of consumers looking to buy homes shows that, on average, 65.8% of respondents across all age cohorts strongly prefer standalone properties compared to other property types. Given the widespread demand, and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.
“Home price appreciation continues to escalate as millennials entering their prime home buying years, renters looking to escape skyrocketing rents and deep pocketed investors drive demand,” said Frank Martell, president and CEO of CoreLogic. “On the supply side, it is also the result of chronic under building, especially of affordable stock. This lack of supply is unlikely to be resolved over the next 5 to 10 years without more aggressive incentives for builders to add new units.”
Nationally, home prices increased 18% in July 2021, compared to July 2020. This is the largest 12-month growth in the U.S. index since the series began (January 1976 – January 1977). On a month-over-month basis, home prices increased by 1.8% compared to June 2021.
“July’s annual home price growth was the most that we have ever seen in the 45-year history of the CoreLogic Home Price Index,” said Dr. Frank Nothaft, chief economist at CoreLogic. “This price gain has far exceeded income growth and eroded affordability. In the coming months this will temper demand and lead to a slowing in price growth.”