Single-family home prices increased again in April as low inventory keeps a nationwide correction at bay.
Prices were up 2% YOY, the 135th straight month of growth, according to CoreLogic’s Home Price Index. However, it’s the sixth straight month of single-digit gains, a boon for affordability. Since peaking in spring 2022 at nearly 20% growth, prices have moderated.
Month-over-month, prices rose by 1.2%.
The ongoing stock shortage could keep prices up even as demand dwindles, possibly for the next twelve months. CoreLogic expects price growth to tick down further in 2023 before changing course at year-end.
“While mortgage rate volatility continues to cause buyer hesitation, the lack of for-sale homes is putting firm pressure on prices this spring, leading to above-average seasonal monthly gains and a rebound in home prices in most markets,” said CoreLogic Chief Economist Selma Hepp.
“Still, while slim inventory is pushing prices up once again and constraining affordability, recent trends suggest that home price growth in 2023 will fall in line with the historical 4% annual average.“
Price corrections are more distinct in pandemic hotspots and the West. Washington (-7.7%), Idaho (-5.9%), Utah (-4.9%), Nevada (-4.5%), California (-3.6%), Arizona (-2.6%), Oregon (-2.6%), Colorado (-2.1%), Montana (-1.1%) and New York (-1.1%) all saw prices dip YOY.
The South continues to see surging prices, with Miami and Atlanta named the strongest cities for price growth at 13.2% and 4.8%, respectively.
By state, Indiana and New Jersey recorded the highest annual home price gains, however, as home shoppers hunt for the best prices in relatively affordable states.
Price corrections have dominated headlines thanks to trouble in the commercial sector, though analysts are divided on the issue. AEI Senior Fellow Desmond Lachman warned that a “perfect storm” of events will spark a recession, leading prices to sink 15-20%. Later, Elon Musk caused a stir when he predicted that home values will tank in the coming year.
Others have disputed this idea. In response to Musk’s tweet, Redfin CEO Glenn Kelman said the weakness is restricted to CRE. “[T]he loss in demand for commercial real estate is what’s driving demand for residential real estate,” he tweeted. “People who work from home need more space at home. Sales volume is down because inventory is down.”
Byron Lazine, a broker and founder of BAM, noted homeowners today are in a much stronger position than in 2008 and a true home price meltdown is unlikely.
Shark Tank star and real estate entrepreneur Barbara Corcoran agreed with Musk’s view of CRE but shot back at the idea that prices will tank. She believes that prices are likely to skyrocket again as soon as interest rates drop.
The minute those interest rates come down, all hell’s going to break loose and the prices are going to go through the roof,” she told Fox.
“It’s going to be a signal for everybody to come back out and buy like crazy, and the house prices [will likely] go up by 20%,” she said. “We could have COVID [market] all over again.”