Home prices increased 7% from November 2016, but these increases could begin to slow in 2018, according to the latest Home Price Index from CoreLogic, a global property information, analytics and data-enabled solutions provider.
CoreLogic’s HPI showed home prices increased 7% from November 2016 to November 2017 and jumped 1% from October to November.
But these home price increases are expected to slow into 2018 as the CoreLogic HPI Forecast shows home prices will increase by just 4.2% from November 2017 to November 2018. Monthly, home prices are predicted to decrease 0.4% from November to December.
The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
“Rising home prices is good news for home sellers, but adds to the challenges that home buyers face,” CoreLogic Chief Economist Frank Nothaft said. “Growing numbers of first-time buyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for ‘starter’ homes and further erosion of affordability.”
CoreLogic’s Market Condition Indicators showed 37% of the largest 100 metropolitan areas in the U.S. are now overvalued in terms of housing stock.
The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income.
Another 36% of the top 100 U.S. metros were undervalued in November and 26% were at value.
“Without a significant surge in new building and affordable housing stock, the relatively high level of growth in home prices of recent years will continue in most markets,” CoreLogic President and CEO Frank Martell said. “Although policymakers are increasingly looking for ways to address the lack of affordable housing, much more needs to be done soon to see a significant improvement over the medium term.”