Western States Led the Nation in Home Price Growth
According to CoreLogic's latest Home Price Index for July 2017, U.S. home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 6.7 percent from July 2016 to July 2017, and on a month-over-month basis, home prices increased by 0.9 percent in July 2017 compared with June 2017, according to the CoreLogic HPI.
Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5 percent on a year-over-year basis from July 2017 to July 2018, and on a month-over-month basis home prices are expected to increase by 0.4 percent from July 2017 to August 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
"In July, home price growth in the Pacific Northwest and mountain states led the nation with the highest appreciation rates," said Dr. Frank Nothaft, chief economist for CoreLogic. "The sharp increase in prices in Washington and Utah has been especially striking, with home price growth in both states accelerating by 3 percentage points since the beginning of this year."
In an analysis of the country's 100 largest metropolitan areas, based on housing stock, 34 percent of cities have an overvalued housing stock as of July 2017, according to CoreLogic Market Conditions Indicators (MCI) data. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals, such as disposable income. Also as of July, 28 percent of the top 100 cities were undervalued, and 38 percent were at value.
When looking at only the top 50 markets, based on housing stock, 46 percent were overvalued, 16 percent were undervalued and 8 percent were at value. The MCI defines an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10 percent below the sustainable level.
"Home prices in July continued to rise at a solid pace with no signs of slowing down," said Frank Martell, president and CEO of CoreLogic. "The combination of steadily rising purchase demand along with very tight inventory of unsold homes should keep upward pressure on home prices for the remainder of this year. While mortgage interest rates remain low, affordability cracks are emerging as over a third of U.S. top cities are now overvalued."