Stock shortages continue to drive home price appreciation, with February home prices rising 20% YOY and 2.2% from the prior month, according to CoreLogic’s Home Price Index.
Annual appreciation of detached properties was 4.8 percentage points higher (21.1%) than attached properties (16.3%).
Sun Belt states led the record high price appreciation. Naples, FL, saw the highest YOY price increase at 41.4%, with Cape Coral close behind at 40%. The four metros with the largest annual price gains were all on Florida’s Gulf Coast.
Florida saw the strongest growth of all states at 29.1% YOY, followed by Arizona (28.6%) and Nevada (25.8%).
CoreLogic says the record growth can be traced to record-low inventory, which forces buyers to compete for a limited number of homes.
Zillow reported that total inventory has fallen from a monthly average of 1.6 million units in 2018 and 2019 to just over 1 million in 2021, and early 2022 numbers are even lower. Inventory isn’t expected to rebound until 2024.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” said Zillow senior economist Jeff Tucker. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
However, the HPI Forecast predicts national annual appreciation will slow to 5% by February 2023.
”New listings have not kept up with the large number of families looking to buy, leading to homes selling quickly and often above list price,” said Dr. Frank Nothaft, chief economist at CoreLogic.
“This imbalance between an insufficient number of owners looking to sell relative to buyers searching for a home has led to the record appreciation of the past 12 months. Higher prices and mortgage rates erode buyer affordability and should dampen demand in coming months, leading to the moderation in price growth in our forecast.”