The rate of annual home price appreciation rose again in May, offsetting the affordability gains from declining mortgage rates, according to CoreLogic.
Over the next 12 months, CoreLogic projects home prices will increase by 5.6% and by 0.8% on a shorter-term basis between May and June. June’s single-family home values are expected to reach an all-time high.
“The recent and forecasted acceleration in home prices is a good and bad thing at the same time,” Frank Martell, president and CEO of CoreLogic, said in a press release. “Higher prices and a lack of affordable homes are two of the most challenging issues in housing today, and every buyer, seller and industry participant is being impacted. The long-term solution lies in expanding supply, which will require aggressive and effective collaboration between policy makers, state and local government entities and home builders.”
About 28% of respondents to a first-quarter CoreLogic consumer survey voiced concern with affording a new home in the future, while 40% said they could not buy a home in their desired market.
“Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May,” said Frank Nothaft, chief economist at CoreLogic.”This has been a shot-in-the-arm for home sales. Sales gained momentum in May and annual home-price growth accelerated for the first time since March 2018.”
Broken down by the largest 100 metropolitan statistical areas in the nation by housing stock, 38% were overvalued in May, while 24% were undervalued and 38% were at value. When cut down to the top 50 largest MSAs, 42% were overvalued, just 16% were undervalued and 42% were at value.
For the second month in a row, Idaho was the only state with double-digit annual price growth, up 10.7%. It was followed by Utah at 7.8% and South Dakota at 7.7%. North Dakota continued its run of annual price depreciation, down 1.7%. Delaware at 0.1% and Connecticut at 0.3% were the next smallest home price appreciations in May.