Home prices jumped 5.5% year-to-year in July, a new report by CoreLogic found.
The Home Price Index also reported that prices rose 1.2% from June 2020 to July 2020. The HPI predicts that prices will see a 0.1% increase from July 2020 to August 2020, and a 0.6% increase from July 2020 to July 2021. Thanks to the COVID-19 pandemic, lower mortgage rates and a lack of inventory of for-sale homes, home price growth is rising at a rapid rate, the fastest rate in close to two years.
“Lower-priced homes are sought after and have had faster annual price growth than luxury homes. First-time buyers and investors are actively seeking lower-priced homes, and that segment of the housing market is in particularly short supply,” said Dr. Frank Nothaft, chief economist for CoreLogic.
Properties in suburban areas are seeing more growth in prices than urban areas. Additionally, homes in areas where COVID-19 cases have been particularly high are most likely to have a decline in prices over the next year, the report found.
“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic. A long period of record-low mortgage rates has opened the flood gates for a refinancing boom that is likely to last for several years. In addition, after a momentary COVID-19-induced blip, purchase demand has picked up, driven by low rates and enthusiastic millennial and investor buyers. Spurred on by strong demand and record-low mortgage rates, we expect to see more homebuilding in 2021 and beyond, which should help support a healthy housing market for years to come,” said Frank Martell, president and CEO of CoreLogic.