Nationally, home prices increased by 5.4%, compared with April 2019. Home prices increased 1.4% in April 2020 compared with March of this year.
The home price acceleration in the April HPI was supported by increased homes sales in the first quarter of the year.
Home price growth is expected to decelerate somewhat in May, with the CoreLogic HPI Forecast calling for a month-over-month increase of 0.3% compared with April 2020.
Looking ahead, the CoreLogic HPI Forecast predicts an annual price decline of 1.3% from April 2020 to April 2021.
In 2021, home prices are expected to decline for the first time in more than nine years.
Home-purchase activity slowed over March and April compared to last year as shelter-in-place orders, and an unprecedented spike in unemployment, dented home-buying activity fueled by millennials.
Nationally, the for-sale inventory of entry-level homes plummeted on average 25% in April.
Should this trend continue, we may see an adverse effect on home sales in the near term.
“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring.
If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states,” said Dr. Frank Nothaft, chief economist at CoreLogic.
The Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts a very high probability (above 60%) of a decline in home prices in Prescott, Arizona; Huntington, West Virginia; Cape Coral-Fort Myers, Florida; and College Station-Bryan, Texas, over the next 12 months.
It also predicts a moderate probability of a price decline (40-60%) in North Port-Sarasota-Bradenton, Florida.
Huntington, West Virginia, was hit particularly hard by the recent downturn in the oil and gas industry. Typical vacation spots, like Cape Coral-Fort Myers and North Port-Sarasota-Bradenton in Florida, as well as Prescott, Arizona, are also expected to experience a decline in home property value as visitors stay home and vacation rentals are sold.
According to the CoreLogic Market Condition Indicators (MCI), an analysis of housing values in the country’s 50 largest metropolitan areas based on housing stock, 40% of metropolitan areas had an overvalued housing market in April 2020, while 18% were undervalued and 42% were at value.
The HPI Forecast continues to show the inequality of home prices across metros. In overvalued markets like Las Vegas and Miami, where the local tourism economy took a hit due to COVID-19, home prices are expected to decline by 7.2% and 4.4%, respectively, by April 2021.
The nationwide HPI of single-family attached units (condos, duplexes), the more affordable housing option, increased by 4.3% year over year in April 2020, whereas the single-family detached increased by 5.7% year over year.
This is indicative of home buyers continuing to take advantage of low rates — and therefore lower monthly payments — to purchase larger detached properties that may have otherwise been out of their price range.
The Philadelphia metro area, where New York City residents are reported to be relocating in the wake of the COVID-19 outbreak, and likely in search of more space and privacy, experienced the largest year-over-year increase in prices of single-family detached home by 10.6%.
Alternatively, Houston experienced one of the lowest year-over-year price increases of 0.7% in single-family attached homes as low-income jobs vanished with the oil and gas collapse.
“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term.
The next 12 to 18 months are going to be very tough times for the broader economy. As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery,” said Frank Martell, president and CEO of CoreLogic.
For more information, visit www.corelogic.com