Home Prices Hit New Record In November 2021 But Expected To Slow In 2022

Home prices across the country climbed 18.1% year-over-year (YOY) in November 2021, according to CoreLogic’s Home Price Index (HPI) Report. This is the highest annual growth since at least 1976 when the HPI began.

For comparison, the annual growth in November 2020 was 8.1%.

Home price growth, which is calculated against the median national home sale price, was up in all four price tiers measured by CoreLogic. The lowest price tier rose 19.8% YOY, while the low- to middle-priced tier rose 19%. Middle- to moderately-priced homes saw an increase of 19.1%, while high-priced homes saw prices rise 18.6%.

Arizona saw the highest YOY appreciation (+28.6%), followed by Florida (+25.8%) and Idaho (+25.5%). Washington, D.C., and Alaska were at the bottom of the list, seeing home prices rise only 4.2% and 7.5%, respectively.

Florida had the highest rate of acceleration year-over-year, with appreciation growing by 18.1%, while Washington, D.C., saw a slowdown of -2%.

For detached or freestanding properties, prices rose 19.4% and were 1.4 times that of attached properties, which saw increases of 13.6%. 

The gap between attached and detached properties has widened as remote workers opt for homes further from the office and in low-density areas. A recent study from United Van Lines found Americans moved to lower-density areas to be closer to their families in 2021. Vermont and South Dakota had the highest inbound migration, at 74% and 69%, respectively.

“This new data from United Van Lines is indicative of COVID-19’s impact on domestic migration patterns, with 2021 bringing an acceleration of moves to smaller, midsized towns and cities,” Michael A. Stoll, economist and professor in the Department of Public Policy at the University of California, Los Angeles, said. 

“We’re seeing this not only occur because of Americans’ desire to leave high-density areas due to risk of infection, but also due to the transformation of how we’re able to work, with more flexibility to work remote.”

However, the gap between attached and detached properties narrowed over the course of 2021 and was at its smallest point in ten months in November.

“Over the past year, we have seen one of the most robust seller’s markets in a generation,” said Frank Martell, president and CEO of CoreLogic.

“While increased interest rates may help cool down homebuying activity, we expect 2022 to be another strong year with continuing upward price growth.”

However, CoreLogic predicts home price values will rise by only 2.8% by November 2022, dampened by slowing demand, increased supply, and sticker shock scaring potential buyers away.

“[T]he Federal Reserve appears poised to allow interest rates to rise in 2022. Higher rates will intensify buyer affordability challenges, especially in overvalued local markets,” said Frank Nothaft, Ph.D., chief economist at CoreLogic.