Home prices up yearly and monthly, older millennials expected to enter market at a rapid rate
Home prices jumped 3.6% from June 2019 to July 2019, and increased 0.5% yearly in July, according to the CoreLogic Home Price Index.
The trend of consecutive price growth is predicted to continue, as CoreLogic suggests that home prices will rise 5.4% year-to-year by next July, and increase 0.4% month-to-month for the August 2019 report. CoreLogic found that among millennials, more than one-quarter are interested in purchasing a home in the next year, while only 8% are thinking of selling in the next 12 months, which could potentially limit housing inventory available.
“Although the rise in home prices has slowed over the past several months, we see a re-acceleration over the next year to just over 5% on an annualized basis. Lower rates are certainly making it more affordable to buy homes and millennial buyers are entering the market with increasing force. These positive demand drivers, which are occurring against a backdrop of persistent shortages in housing stock, are the major drivers for higher home prices, which will likely continue to rise for the foreseeable future,” said Frank Martell, president and CEO of CoreLogic
The majority of homes in the largest metropolitan areas in the U.S. remain at-value or undervalued in regards to home prices, while only 37% are considered overvalued. An overvalued housing market is defined one in which home prices are at least 10% above the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.
“Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income,” said Dr. Frank Nothaft, chief economist at CoreLogic. “With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”