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).
Nationally, home prices increased 5.5% in July 2020, compared with July 2019, and were up 1.2% compared to last month, when home prices increased 4.3%.
In July, annual home price growth accelerated to its fastest rate in nearly two years. The one-two punch of strong purchase demand — bolstered by falling mortgage rates, which dipped below 3% for the first time ever in July — and further constriction of for-sale inventory has driven upward pressure on home price appreciation. The national HPI Forecast shows annual home price growth slowing through July 2021, 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.
“Lower-priced homes are sought after and have had faster annual price growth than luxury homes,” said Dr. Frank Nothaft, chief economist at CoreLogic. “First-time buyers and investors are actively seeking lower-priced homes, and that segment of the housing market is in particularly short supply.”
“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic. 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,” said Frank Martell, president and CEO of CoreLogic. “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.”
CR Note: The overall impact on house prices will depend on the duration of the crisis.