Entry-level priced homes, which continue to be in short supply, are, helping to drive strong price gains. CoreLogic says home prices nationwide, including distressed sales, increased year over year by 5.5 percent in July 2020 and were up 1.2 percent compared to the previous month. The annual increase was the fastest in nearly two years.
The company said the “one-two punch of strong purchase demand – bolstered by falling mortgage rates, which dipped below 3 percent for the first time ever in July – and further constriction of for-sale inventory has driven upward pressure on home price appreciation.”
Dr. Frank Nothaft, CoreLogic’s chief economist said, “Lower-priced homes are sought after and have had faster annual price growth than luxury homes. First-time buyers and investors are actively seeking lower-priced homes, and that segment of the housing market is in particularly short supply.”
CoreLogic Home Price Increase (HPI) Forecast is for home prices to increase from July 2020 to August 2020 by 0.1 percent and by 0.6 percent from July 2020 to the same month in 2021. The HPI report says growth will slow over the next year, reflecting the anticipated elevated unemployment rates during the next year. “This could lead to an increase of distressed-sale inventory as continued financial pressures leave some homeowners unable to make mortgage payments, especially as forbearance periods come to a close.”
“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic,” according to Frank Martel, CoreLogic president and CEO. “A long period of record-low mortgage rates has opened the flood gates for a refinancing boom that is likely to last for several years. In addition, after a momentary COVID-19-induced blip, purchase demand has picked up, driven by low rates and enthusiastic millennial and investor buyers. Spurred on by strong demand and record-low mortgage rates, we expect to see more home building in 2021 and beyond, which should help support a healthy housing market for years to come.”
Home prices were up year-over-year in every state. The greatest increases were in Idaho (9.8 percent), Maine (9.1 percent), and Arizona (9 percent).