Home prices are up strongly both year-over-year and month-over-month, according to the September 2017 Home Price Index (HPI) released by CoreLogic Tuesday morning.
Nationally, prices increased by 7 percent from September 2016 to September 2017. Meanwhile, month-over-month home prices increased by 0.9 percent in September 2017 compared with August 2017.
“Heading into the fall, home price growth continues to grow at a brisk pace,” said Chief Economist for CoreLogic, Dr. Frank Nothaft. “This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices.”
The HPI also shed light on home prices in metro markets—specifically, if average prices are undervalued, at value, or overvalued. According to the data, 28 percent of the top 100 metropolitan areas were undervalued while 36 percent were overvalued.
Based on the top 50 markets, the report notes, 48 percent were overvalued, 16 percent were undervalued, and 36 percent were at value.
According to the report, there were seven metros overvalued for the month of September: Las Vegas-Henderson-Paradise, Nevada; Denver-Aurora-Lakewood, Colorado; Houston-The Woodlands-Sugar Land, Texas; Miami-Miami Beach-Kendall, Florida; New York-Jersey City-White Plains in New York and New Jersey; and Washington-Arlington-Alexandria in the District of Columbia, Virginia, Maryland, and West Virginia.
Utilizing values derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state—CoreLogic projects prices to increase year-over-year by 4.7 percent by September 2018.
“A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate,” said Frank Martell, President and CEO of CoreLogic. “While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate.“
CoreLogic defines an overvalued market as “one in which home prices are at least 10 percent higher than the long-term, sustainable level, while an undervalued market is one in which home prices are at least 10 percent below the sustainable level.”
To view the full report, click here.