CoreLogic released its latest Home Price Index report, showing that home prices continued their annual and month-over-month increases in July.
Home prices rose 3.6 percent from a year ago, while rising 0.5 percent from the previous month.
“Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income,” CoreLogic Chief Economist Dr. Frank Nothaft said in a release. “With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”
Home prices continue to increase on an annual basis, the CoreLogic HPI Forecast found, indicating annual price growth will increase by 5.4 percent by July 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.4 percent in August 2019.
The CoreLogic HPI Forecast is a projection of home prices calculated 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.
Despite the continually rising home prices, an analysis by CoreLogic found that housing values in the 100 largest metropolitan areas saw only 37 percent of them with overvalued markets, with 23 percent of the markets undervalued.
“Lower rates are certainly making it more affordable to buy homes and millennial buyers are entering the market with increasing force,” CoreLogic President and CEO Frank Martell said.
In a second-quarter survey conducted with RTi Research of Connecticut, CoreLogic found that 26 percent of millennials expressed interest in buying a home in the next 12 months, yet only 8 percent expressed desire in selling their home.
This means that new housing starts, or sellers from other age cohorts, will need to make up the necessary available housing stock to meet the demand, CoreLogic stated.
“These positive demand drivers, which are occurring against a backdrop of persistent shortages in housing stock, are the major drivers for higher home prices, which will likely continue to rise for the foreseeable future,” Martell said.