In November, home prices climbed by 3.7% from the previous year, according to CoreLogic’s latest Home Price Forecast.
The CoreLogic HPI projects future home price growth based on several economic variables and measures the number of owner-occupied households in each state.
According to CoreLogic’s data, home prices increased by 0.5% from October and are now projected to increase by 5.3% come November 2020.
Frank Nothaft, CoreLogic’s chief economist, said the latest U.S. index shows the slowdown in home price appreciation experienced in early 2019 ended by late summer.
“Growth in the U.S. index quickened in November and posted the largest 12-month gain since February,” Nothaft said. “The decline in mortgage rates, down more than one percentage point for fixed-rate loans from November 2018, has supported a rise in sales activity and home prices.”
As home prices continue to rise, the company’s report also indicates that the nation’s Millennial homebuyers, who often tend to fit in the first-time buyer category, are still experiencing affordability challenges when purchasing a home.
During the second quarter of 2019, CoreLogic conducted a survey measuring consumer-housing sentiment among Millennial homebuyers.
The company’s findings revealed that while older Millennials are more optimistic about homeownership, their younger counterparts are not particularly confident about entering the housing market.
According to the study, 64% of older Millennials, aged between 30 and 38, claimed they were strongly considering moving within the next 12 months, while younger Millennials, aged between 21 and 29, said they planned on renting their next home.
Despite the purchase intent among older millennials, CoreLogic indicates 43% still view homeownership as unaffordable and out of reach.
Frank Martell, CoreLogic’s president and CEO, said the company is continuing to see a split among older and younger millennials when it comes to their plans to purchase a home.
“With home prices expected to rise just over 5% over the next 12 months, affordability remains a concern for most prospective buyers,” Martell said.
As homebuyers in this demographic spend an average of $250,000 on a home, housing affordability is a primary concern, especially as CoreLogic’s recent MCI report revealed that 40% of the nation’s metropolitan areas had an overvalued housing market as of September.
The MCI, which details the housing values in America’s 100 largest housing markets, 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 and more, according to CoreLogic.
During the month, 27% of the country’s top 100 metropolitan areas were undervalued, and 40% were at market value, according to the company.
NOTE: The CoreLogic HPI is based on public record, servicing and securities real-estate databases and incorporates more than 40 years of repeat-sales transactions for analyzing home price trends.