According to the CoreLogics Home Price Index, price increases rose by 4.9% annually in June and by 1% month-on-month. Although the 5.2% increase forecast a year ago was not achieved, it was the highest growth rate for June since 2013.
The annual increase in June was also a 3.6% gain over the previous year’s price growth rate. Since the corona virus has a negative impact on the economy, the data provider predicts that prices will only increase by 0.1% by July and fall by 1% by June 2021. Since bottoming out in March 2011, the HPI has increased 68.3% and has been increasing every month since February 2012.
"Property price appreciation continues at a solid pace, reflecting the fundamental strength of demand drivers and the limited sale of inventory," said Frank Martell, president and CEO of CoreLogic, in a press release. "We expect these price increases to weaken over the next twelve months. Given the economic outlook, residential construction will remain a bright spot for the foreseeable future."
Record mortgage rates contributed significantly to keeping the property market strong. Because they hover on a historic nadir, more millennials are trying to take advantage of them. In the meantime, affordability has risen to its highest level since 2016 despite steady price growth.
Except for the 1.1% decline in South Dakota, each state saw annual increases in average house prices. Idaho's 10.5% growth led the nation, followed by 9.8% in Montana and 8.5% in Arizona and Missouri. Among the 10 largest metropolitan areas, Washington, DC grew fastest at a rate of 4.8% per year, followed by 4.5% in San Diego and 4.4% in Houston. Only prices in San Francisco declined and decreased 0.2%.
Housing markets that are heavily dependent on entertainment, tourism and hospitality are likely to have difficulties until next year. CoreLogic expects property prices in Las Vegas to fall 11.3% by June 2021, while locations like Lake Havasu, Arizona – where coronavirus cases have reoccurred most often – face the greatest risk of property price declines.