Home Prices See Year-to-Year Jump, But Minimal Monthly Gains

Home prices jumped 4% year-to-year in January, according to CoreLogic’s U.S. Home Price Insights Report for January 2020.

However, prices only saw a 0.1% increase from December 2019 to January. CoreLogic predicts that home prices will rise 5.4% year-to-year from January 2020 to January 2021, and that the February report will see a 0.2% price increase from January 2020. In Pennsylvania, home prices rose 4.2% year-to-year in January.

“January marked the third consecutive month that annual home price growth accelerated in our national index, as low mortgage rates and rising income supported home sales. In February, mortgage rates fell to the lowest level in more than three years, which likely will spur additional home shopping activity and price appreciation,” said Dr. Frank Nothaft, chief economist for CoreLogic.

CoreLogic also found that nearly half (44%) of millennials consider homebuying affordable, however, that makes them more optimistic than older generations, in which 61% consider the process unaffordable.

“Despite a slowdown in home price growth last summer, annual appreciation is beginning to stabilize. While just under half of millennials feel confident they can afford to purchase a home, housing starts have shot up and mortgage rates have come down, which has helped improve affordability and spur overall housing demand,” said President and CEO of CoreLogic Frank Martell.

Of the 100 largest metros in the U.S., only one-third are considered overvalued, while 29% are undervalued and 38% are at-value. Overvalued is a market in which property prices are at least 10% higher than the long-term, sustainable level and an undervalued housing market is one in which home prices are at least 10% below the sustainable level.