Home Price Appreciation Jumps to Six-Year High
CoreLogic, Irvine, Calif., said home prices increased 6.7% nationally in September 2020 compared with September 2019, the fastest annual acceleration since May 2014.
On a month-over-month basis, home prices increased by 1.1% compared to August 2020, the firm’s CoreLogic Home Price Index for September reported.
“Housing continues to be a bright spot during an otherwise challenging economic time for many U.S. households,” said CoreLogic President and CEO Frank Martell. “Those in sectors that weathered the transition to remote work successfully are now able to take advantage of low mortgage rates to purchase a home for the first time or to trade-up to a larger home.”
CoreLogic said home-purchase demand maintained pace in the late summer compared to previous years as record-low mortgage rates continue to motivate prospective homebuyers, including first-time buyers and homeowners looking to trade-up or invest in a second home. But the National Association of Realtors and U.S. Census Bureau reported the national supply of homes for sale fell in September. This inventory shortage has intensified upward pressure on home price appreciation as consumers compete for the limited number of homes on the market.
“COVID has contributed to the acute shortage of inventory as the pace of new construction slowed and older prospective sellers postponed listing their homes until after the pandemic,” said CoreLogic Chief Economist Frank Nothaft. “Once the pandemic passes or a vaccine is widely administered, we should see a noticeable pick-up in for-sale homes. And if the economy’s recovery is sluggish next year, distressed sales may also add to market inventory.”
Looking forward, the CoreLogic Home Price Index Forecast shows national home price increases slowing to 0.2% over the next 12 months as eroding affordability and increased for-sale inventory moderates appreciation. “However, should the economic recovery be more robust, then we would expect projections for home price performance to improve,” the report said.