Home prices continue to surge, rising for their seventh consecutive month in February, according to the latest Home Price Index from CoreLogic, a property information, analytics and data-enabled solutions provider.
Home prices increased 6.7% across the U.S. from February 2017 to February 2018, and increased 1% from the month before, according to the report.
And this increase was even higher in western states, which continue to have hot housing markets, CoreLogic explained.
“A number of western states have had hot housing markets,” CoreLogic Chief Economist Frank Nothaft said. “Idaho, Nevada, Utah and Washington all had home prices up more than 11% over the last year.”
“With the recent rise in mortgage rates, affordability has fallen sharply in these states,” Nothaft said. “We expect home-price growth to slow over the next 12 months, dropping to 5% to 6% in Idaho, Utah and Washington, and slowing to 9.6% in Nevada.”
For the U.S. overall, CoreLogic’s HPI Forecast shows prices will slow to an increase of 4.7% by February 2019. California, on the other hand, will continue to surge, rising 10.3% year-over-year.
The CoreLogic HPI Forecast is a projection of home prices that is calculated 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.
An analysis of the country’s top 100 largest metros based on housing stock shows that 34% are now considered overvalued as of February, CoreLogic reported.
The market conditions indicator 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.
As of February, about 30% of the top 100 metros were undervalued while 36% were at value, the report showed.
“Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new homebuyers,” CoreLogic President and CEO Frank Martell said. “CoreLogic’s market conditions indicator has identified nearly one-half of the 50 largest metropolitan areas as overvalued.”
“Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth,” Martell said.