CoreLogic's report on April home prices, the first for that month, says that despite fears that home prices would "bottom out like they did in the Great Recession," they continued to accelerate reaching their highest annual growth since August 2018. The U.S. CoreLogic HPI was up 5.4 percent compared to April 2019, with gains in all states and rose 1.4 percent compared to the previous month. Purchase activity, particularly among millennials, bounced back in April as the economy began to open back up. Gains were also driven by low inventory of homes especially at the entry level. Those plummeted by 25 percent on average nationally.
However, the company cautions that the economic effects of the recession will continue to make themselves known over the next 12 to 18 months - and it expects that 2021 will bring the first decline in home prices in nine years. Still, the early rebound "indicates the housing market may be equipped to lead the broader economy through the recovery."
The HPI Forecast predicts the U.S. index will fall 1.3% from April 2020 to April 2021. There will be a more immediate deceleration as well. CoreLogic is predicting that prices will rise over the next month, but that increase will be only 0.3 percent.
CoreLogic's Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts a high probability that areas hit by downturns in tourism and oil and gas will experience largest home price declines
"The very low inventory of homes for sale, coupled with homebuyers' spur of record-low mortgage rates, will likely continue to support home price growth during the spring," said Dr. Frank Nothaft, chief economist at CoreLogic. "If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states."
CoreLogic notes there is still a discrepancy between the rates of appreciation for single-family detached houses and those that are attached such as condos and duplexes. Detached home prices increased 5.7 percent year-over-year in April while attached units, usually the more affordable options, were up by 4.3 percent. The company says this is indicative of home buyers continuing to take advantage of low rates - and therefore lower monthly payments - to purchase larger detached properties that may have otherwise been out of their price range.
The Philadelphia metro area, where New York City residents are reported to be relocating in the wake of the COVID-19 outbreak, and likely in search of more space and privacy, experienced the largest year-over-year increase in prices of single-family detached homes, 10.6 percent. Alternatively, Houston experienced one of the lowest annual gains, an increase of 0.7% in single-family attached homes as low-income jobs vanished with the oil and gas collapse.
CoreLogic's Market Condition Indicators (MCI), an analysis of housing values in the country's 50 largest metropolitan areas, found 40 percent of areas had an overvalued housing market in April 2020, while 18 percent were undervalued, and 42 percent were at value. (In March the figures were 35 percent, 28 percent, and 36 percent, respectively) The MCI analysis categorizes home prices in individual markets by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income. An overvalued market as one in which home prices are at least 10 percent higher than those levels while in an undervalued one home prices are at least 10 percent below it.