But supply is severely lagging demand in hottest markets
Even the continued rise of home prices is not deterring would-be home buyers…if they could find homes to buy.
Home prices increased 7.1% year-over-year in May according to CoreLogic’s Home Price Index; and by 1.1% month-over-month.
“The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes,” said Dr. Frank Nothaft, chief economist for CoreLogic.
In the hottest markets such as Denver, San Francisco, and Seattle the number of renters wanting to buy is four times higher than the number of available sellers.
“During the first quarter, we found that about 50% of all existing homeowners had a mortgage rate of 3.75% or less. May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate,” added Nothaft.
What’s next for home prices?
CoreLogic’s HPI Forecast is for the national home-price index to continue to increase by 5.1% on a year-over-year basis from May 2018 to May 2019. On a month-over-month basis, home prices are expected to rise 0.3% in June 2018.
The firm’s research reveals that over the next 12 months 41% of renters are considering buying while only 11% of homeowners are considering selling over that same period.
