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Tuesday, February 02, 2021

CoreLogic: House Prices up 9.2% Year-over-year in December

by Calculated Risk on 2/02/2021 08:00:00 AM

Notes: This CoreLogic House Price Index report is for December. The recent Case-Shiller index release was for November. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: Onward and Upward: Annual US Home Price Appreciation in 2020 Outpaced 2019 Levels by 50%, CoreLogic Reports

CoreLogic® ... today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for December 2020, providing a lookback at the state of the housing market and the pandemic’s impact on home price performance throughout 2020.

The housing market exceeded expectations in 2020, closing out the year with the highest annual home price gain since February 2014 in December at 9.2%. Despite a blip in April, home-purchase demand surged as record-low mortgage rates persuaded first-time homebuyers to enter the market. Meanwhile, the consequences of the pandemic were seen in the dwindling supply of homes — dropping, on average, 24% below 2019 levels — as homeowners delayed selling.

These factors translated to significant home price growth in 2020, surpassing the previous year’s levels with an average monthly year-over-year gain of 5.7%, compared with 3.8% in 2019. However, with the severe shortage of for-sale homes, we may see rising affordability concerns and some prospective buyers priced out of the market in 2021.

“At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market,” said Frank Martell, president and CEO of CoreLogic. “However, market conditions leading into the crisis — namely low home supply, desire for more space and millennial demand — amplified the rapid acceleration of home prices.”

Two record lows are fueling home price gains: for-sale inventory and mortgage rates,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated. We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”
emphasis added