Residential Real Estate News
U.S. Home Price Index Growth Rate Hits Record High in July
According to CoreLogic's latest Home Price Index, continued low mortgage rates, coupled with ongoing challenges of persistent demand and constricted supply continue to put significant upward pressure on home prices.
CoreLogic's recent survey of consumers looking to buy homes shows that, on average, 65.8% of respondents across all age cohorts strongly prefer standalone properties compared to other property types. Given the widespread demand, and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.
"Home price appreciation continues to escalate as millennials entering their prime home buying years, renters looking to escape skyrocketing rents and deep pocketed investors drive demand," said Frank Martell, president and CEO of CoreLogic. "On the supply side, it is also the result of chronic under building, especially of affordable stock. This lack of supply is unlikely to be resolved over the next 5 to 10 years without more aggressive incentives for builders to add new units."
"July's annual home price growth was the most that we have ever seen in the 45-year history of the CoreLogic Home Price Index," said Dr. Frank Nothaft, chief economist at CoreLogic. "This price gain has far exceeded income growth and eroded affordability. In the coming months this will temper demand and lead to a slowing in price growth."
Top Report Takeaways
- Nationally, home prices increased 18% in July 2021, compared to July 2020. This is the largest 12-month growth in the U.S. index since the series began (January 1976 - January 1977). On a month-over-month basis, home prices increased by 1.8% compared to June 2021.
- In July, appreciation of detached properties (19.7%) was again the highest measured since the inception of the index and nearly double that of attached properties (11.6%) as prospective buyers continue to seek more living space and lower density communities.
- Home price gains are projected to slow to a 2.7% increase by July 2022, as ongoing affordability challenges deter some potential buyers and an expected uptick in new for-sale listings cause a slowdown in home price growth.
- In July, home prices rose sharply in the west with Twin Falls, Idaho, experiencing the highest year-over-year increase for a third consecutive month at 39.8%. Bend, Oregon, ranked second with a year-over-year increase of 37.1%.
- At the state level, Idaho and Arizona again led the way with the strongest price growth at 33.6% and 28.4%, respectively. Utah also had a 25.7% year-over-year increase as home buyers seek out more affordable locations with lower population density and attractive outdoor amenities.
