The home price recovery continues, despite a moderate slowdown in August, driven by rising mortgage rates and declining home affordability, CoreLogic claims in a new report.
The research firm released its August CoreLogic Home Price Index on Tuesday, noting that home prices – when including distressed sales – still grew 12.4% year-over-year in August.
The company’s two-digit growth estimate is in line with the latest Clear Capital Home Data Index Market Report, which shows national home prices up 10.9% from last year in September.
Meanwhile, CoreLogic’s pending HPI report for September puts price growth for the month in the 12.7%-range and shows a 0.2% appreciation climb from August to September.
When extracting distressed sales from the CoreLogic report, August home prices still rose 11.2% year-over-year.
But with the summer months over and lingering market uncertainty, price drops are expected in the coming months.
"Home price gains were negligible month over month in August—an expected decrease in the pace of appreciation as housing enters the off-season," said Dr. Mark Fleming, chief economist for CoreLogic. "While prices increased more than 12% on a year-over-year basis, the month-to-month change is more telling of this year's late summer trend."
Going forward, CoreLogic CEO Anand Nallathambi anticipates "moderate gains in home prices over the balance of this year, supported by the recent downward trend in rates and continued tight supplies of homes in many markets.”
The five states seeing the most price appreciation – with distressed sales included – were Nevada (with 25.9% growth); California (+23.1%); Arizona (+16.4%); Wyoming (+15%) and Georgia (+14.8%).
Yet, on a more local level, cities once known as destabilized housing markets are recording strong year-over-year price gains.
San Francisco led the pack, according to Clear Capital, with home prices rising 28.3% annually and 4.4% from the prior quarter. The hard-hit Detroit market also saw prices edge up 4.3% from the last quarter and 23.3% from last year, Clear Capital said.
But these two markets couldn’t be more different despite significant price gains.
San Francisco features a median home price of $600,000, while Detroit's median hit $107,500.
REO saturation remains low in San Francisco, with REOs making up only 6.3% of the market. In Detroit, REOs still represent 31.7% of existing properties.
Clear Capital suggests investors are now slowing down in high-interest markets such as Miami, Phoenix and Las Vegas as home buyers look to markets that may have been ignored in recent years.
"While national and regional rates showed more of the same in September, an interesting dichotomy is unfolding beneath the surface," said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital.
"Strong performances in San Francisco and Detroit remind us that in a dynamic market, the only constant is change. For about a year and a half now, we’ve been focused on First-In, First-Out recoveries characterized by hard hit markets attracting investor interest, like Miami, Phoenix and Las Vegas. Now as the recovery matures, we see home buyers re-engaging in markets that haven’t fit the typical investor profile."