Annual price gains reached an all-time high in August at 18.1%, according to CoreLogic’s Home Price Index (HPI) and HPI Forecast. It’s the highest twelve-month increase in the history of the index.
Month-over-month, prices rose 1.3% compared to July. The HPI Forecast suggests that home price growth will slow to 0.3% from August to September and YOY 2.2% as continuing supply chain problems and competition from cash-rich investors deter potential buyers in the coming year.
“Home prices continue to escalate at a torrid pace as a broad spectrum of buyers drive demand for a limited supply of homes,” said Frank Martell, president and CEO of CoreLogic.
“We expect to see the trend of strong price gains continue indefinitely with large amounts of capital chasing too few assets.”
A CoreLogic consumer survey reflects this trend of big money flooding the market, with 59% of respondents looking to buy a home reporting they earn six figures or more, while only 10% reported they earn less than $50,000. Mortgage payments are now more unaffordable for average buyers than at any time since 2008.
“What this points to is that home prices have risen astronomically in the pandemic, and that’s increasingly putting them out of reach for first-time homebuyers,” Zillow senior economist Jeff Tucker said.
“It’s not a surprise that we are now seeing affordability metrics… throwing up some warning signs — that homes are getting out of reach for the typical homebuyer to afford them.”
Appreciation of detached properties hit 19.8%, its highest ever and 7.8% higher than the appreciation of attached properties.
“Single-family detached homes continue to be in high demand,” said Dr. Frank Nothaft, chief economist at CoreLogic.
“These properties offer more living space and distance from neighboring homes than that of attached properties. On average, detached homes have 28% more inside space compared to single-family attached properties and about twice as much space as apartments in multifamily structures.”
Price growth increased the most in the Western U.S. Idaho topped the list with a 32.2% change YOY, followed by Arizona with a 29.5% change YOY.
While each of the top ten metros surpassed their 2020 growth, the HPI Forecast predicts that affordability issues will lead to highly localized rates of growth or decline over the next year. Houston, for example, is expected to see a 1.3% decline in home price by August 2022 due to hurricane destruction and setbacks in the Gulf Coast oil industry.
Springfield, Mass., and the California cities of Chico and Merced are expected to see declines in the coming year as well.