February looks as though it may be yet another month when the long-predicted end to rising rates of home appreciation was supposed to happen and didn't. CoreLogic, the first to report on home prices for the month, says home prices nationally increased 6.7 percent from February 2017 to the same month this year compared to a 12-month change in January of 6.6 percent. Home prices nationwide, including distressed sales, were up 1.0 percent month-over-month in February.
Prices were up in every state, with western states continuing to outpace most of the rest of the nation. The states with the highest increases February were: Washington (12.5%), Nevada (12.2%), Utah (11.1%) and Idaho (10.2%).
Frank Nothaft, CoreLogic's Chief Economist, said "A number of western states have had hot housing markets, Idaho, Nevada, Utah and Washington all had home prices up more than 11 percent over the past year. With the recent rise in mortgage rates, affordability has fallen sharply in these states. We expect home-price growth to slow over the next 12 months, dropping to 5 to 6 percent in Idaho, Utah and Washington, and slowing to 9.6 percent in Nevada."
The company forecasts an increase of 4.7 percent in national home prices from February 2018 to February 2019 and no appreciable increase from February 2018 to March. 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.
The graph below compares the national year-over-year percent change for the CoreLogic HPI and CoreLogic Case-Shiller Index from 2000 to February 2018, with forecasts one year into the future. CoreLogic notes that both the CoreLogic HPI Single Family Combined tier and the CoreLogic Case-Shiller Index are posting positive, but moderating year-over-year percent changes, and forecasting gains for the next year.
CoreLogic's President and CEO Frank Martell said, "Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new homebuyers. CoreLogic's Market Conditions Indicator has identified nearly one-half of the 50 largest metropolitan areas as overvalued. Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth."
