Favorable conditions such as low mortgage rates and near-record unemployment numbers may add to a first-time buyers’ desire to buy a home, but CoreLogic says the lack of supply is leading its Home Price Index Forecast to project home prices rising more in 2020.
CoreLogic is forecasting home price growth to outpace 2019’s 3.6%, with prices rising by an average of 4.8%. Also, CoreLogic says rising home prices will create more home-equity wealth in 2020 and overall delinquency and foreclosure rates are likely to remain at or below current levels.
The latest CoreLogic Home Price Index said home prices rose 3.5% and are projected to increase by 5.4% over the next year. The increase in the October 2019 HPI gain, however, was down from October 2018’s rise of 5.2%.
October 2019’s increase in the HPI was higher than September’s 3.3%. CoreLogic states home prices have been gradually rising year-over-year between 3.2% and 3.5% over the past six months.
Home prices have increased annually on a monthly basis for more than seven years since 2012 and have gained 62.5% since bottoming out in March 2011. The overall HPI in October 2019 was 9.4% than its pre-crisis peak in April 2006.
The lowest-priced tier increased 5.5% year-over-year in October 2019, compared to 4.7% for the low-to middle-price tier, 4% for the middle-to moderate-price tier, and 3.1% for the high-price tier.
The serious delinquency rate —defined as 90 days or more past due—was 1.3% in August 2019, which is down from August 2018’s 1.5%.
Minnesota, Iowa, Nebraska, North Dakota, Montana, New Hampshire, and Utah all saw increases in serious delinquency rates, or loans 90 days or more past due including loans in foreclosure.
On a smaller scale, 47 metropolitan areas recorded small annual increases in overall delinquency rates in August. Some of the highest gains were in the Midwest and Southeast. Metros with the largest increases were Dubuque, Iowa (2.2 percentage points), Pine Bluff, Arkansas (1.1 percentage points), Goldsboro, North Carolina (0.6 percentage points) and Panama City, Florida (0.5 percentage points).
The Single-Family Rent Index found rents nationally were up 3% over the past year. A solution, CoreLogic states, is building more homes.
CoreLogic is expecting more housing starts in 2020 than in 2019, but these homes will increase supply in the higher-priced tier.