According to the latest CoreLogic Home Price Index (HPI) and HPI Forecast, home prices in March 2021 increased 11.3%, compared to March 2020. On a month-over-month basis, home prices increased by 2% compared to February 2021.
The CoreLogic HPI Forecast indicates that home prices will increase on a month-over-month basis by 1.1% from March 2021 to April 2021, and on a year-over-year basis by 3.5% by March 2022, as affordability continues to challenge prospective buyers, thus stunting price growth.
“Despite the severe slowdown last year, the 2021 spring homebuying season is trending strong—reflecting the many positive signs of economic recovery,” said Frank Martell, President and CEO of CoreLogic. “With prospective buyers continuing to be motivated by historically low mortgage rates, we anticipate sustained demand in the summer and early fall."
CoreLogic found that millennials are leading the homebuying charge, with older millennials seeking move-up purchases, and younger millennials entering their peak homebuying years. As a whole, their share rose even higher in 2020, as millennial homebuyers comprised more than half of overall home-purchase applications. According to CoreLogic, prior to 2020, while millennial home purchase applications comprised less than half of all purchase applications, their share grew from 33% in 2014 to 47% in 2019, rising about two to four percentage points per year.
“Lower-priced homes are in big demand and short supply, driving up prices faster compared to their more expensive counterparts,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “First-time buyers seeking a starter home priced 25% or more below the local-area median saw prices jump 15.1% during the past year, compared with the overall 11.3% gain in our national index."
Regionally, home prices rose sharply in the West in the month of March, with seven of the 10 metros ranked with the highest year-over-year increases. Boise, Idaho ranked at the top with a year-over-year increase of 27.7%.
Similarly, at the state level, two Mountain-West states—Idaho and Montana—had the strongest price growth in March, up 25% and 18.8% respectively, as they continue to see an uptick in inbound migration from buyers moving away from more costly coastal areas. Arizona saw the third-strongest price growth with an 18% increase.
Conversely, the HPI Forecast also detailed a continued disparity in home price growth across metros. In markets like Houston, which was hit hard by the collapse of the oil industry and the recent hurricane season, home prices are expected to decline 0.5% by March 2022. The CoreLogic Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts that metros such Beaumont-Port Arthur, Texas; Brownsville-Harlingen, Texas; New Haven-Milford, Connecticut; and Gulfport-Biloxi-Pascagoula, Mississippi are at the greatest risk (25-50%) of a decline in home prices over the next 12 months. Detroit, Michigan is also at low risk (less than 25% probability) of a price decline over the same time period.
Click here for more from CoreLogic’s Home Price Index (HPI) and HPI Forecast.