CoreLogic’s latest Home Price Index (HPI) and HPI Forecast for June 2021 has found that home prices nationwide increased 17.2% compared to June 2020, a rate not seen since the late-1970s. On a month-over-month basis, home prices increased by 2.3% compared to May 2021. Home price gains are projected to slow to a 3.2% increase by June 2022, as ongoing affordability challenges may deter some potential buyers, as an uptick in new for-sale listings cause a slowdown in home price growth.
“Home prices have been rising in the mid-single digits for some years now. The recent surge to double-digit price jumps reflect the convergence of exceptional demand and persistent low supply,” said Frank Martell, President and CEO of CoreLogic. “With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future.”
Factor in still-low mortgage rates under the 3% mark, mortgage purchase apps have seen a slight uptick in the past week despite the continued record high prices. However, CoreLogic projects home price gains may slow over the next 12 months as demand moderates and for-sale inventory rises.
In June, appreciation of detached properties (19.1%) was the highest measured since the inception of the HPI and nearly double that of attached properties (10.7%), as prospective buyers continued to seek more living space and lower density communities.
Pandemic-related factors such as the need for more space to accommodate remote work situations, or more square footage for families spending more time at home have played a role in the rise in prices.
With prices rising, affordability is quickly becoming a major barrier to potential homeowners, especially millennials.
"For most young adults, buying a home is an increasingly unattainable goal," said Nigel Wilson, Chief Executive at Legal & General Group, which conducted a recent study on millennial homeownership. "Millennials we studied cited crushing student and medical debt, and the failure of wages to keep up with the cost of living as accelerators of this generational problem of unaffordable housing. If you’re under the age of 40, you’re part of a generation that needs access to a bigger and more broadly available supply of affordable housing than currently exists."
CoreLogic found that home prices rose sharply in the west in June, with the top 10 greatest year-over-year price changes occurring in the following states, as homebuyers seek out more affordable locations with lower population density and attractive outdoor amenities.
- Idaho: 34.2%
- Arizona: 26.1%
- Montana: 24.3%
- Utah: 23.4%
- Washington: 21.6%
- Vermont: 21.2%
- Rhode Island: 20.1%
- Nevada: 19.9%
- Oregon: 19.7%
- Connecticut: 19.6%
“The pandemic sparked an increase in buyer desire for lower density neighborhoods and more living space—both inside and outside their home,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “Communities with single-family detached houses fill this need. Detached homes had the highest annual growth in June since the inception of the CoreLogic Home Price Index in 1976.”