The appreciation of real estate prices rose annually by 5.9% in August – the highest growth rate since June 2018 – and thus exceeded the previous year's rate of 3.5% and, according to the CoreLogics Home Price Index, exceeded the high expectations of 2019.
The HPI has recorded positive year-on-year growth for each month since February 2012. The recent steady monthly increases also continued, increasing 1% from July. Further growth of 0.2% is forecast until September. However, CoreLogic was forecasting a significant decline in 2021, with the inventory deficit likely to decrease and demand easing after the still-rising unemployment. However, the effects on prices will be felt differently at different levels of the market.
"The imbalance between home buyer demand and inventory sales is particularly acute for cheaper homes," said Frank Nothaft, chief economist at CoreLogic, in the report. "Because of this imbalance, property prices that were more than 25% below the median rose 8.6% last year, compared to the 5.9% increase for all houses."
Average house prices rose annually in all 50 states. Idaho again outpaced the rest with a growth rate of 10.8% from August 2019. This was followed by jumps of 9.7% in Arizona and 9.6% in Maine. New York posted the lowest rate, just up 0.6% year over year. Illinois and Hawaii rounded out the bottom three at 1.7% and 2.5%, respectively.
Of the 10 largest metropolitan areas, San Diego saw the highest annual growth, increasing by 6.2%. Washington, D.C., was third with 5.5%, behind Los Angeles with 5.3%. CoreLogic predicts a decline in property prices in some of these anchor markets. The data provider expects prices in Las Vegas to fall 6.5% through August 2021, Boston 2.9% and Houston 2%.
Lake Charles, La., Las Vegas, Miami, Springfield, Massachusetts, and Modesto, California have been rated as the real estate markets at greatest risk for price declines due to their reliance on tourism and hospitality for their local economies and the likelihood of a coronavirus revival.