What's happening with US home prices?

Home prices across the United States continued to increase in November 2021, according to recent figures from CoreLogic.

The analytic firm’s latest home price index revealed that home prices increased 18.1% nationally in November 2021, compared to November 2020. And on a month-over-month basis, home prices increased by 1.3% compared to October 2021.

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However, despite the increase in home prices, CoreLogic forecasts that home price gains will slow to a 2.8% increase by November 2022.

“While 2021 was a record-breaking year for US home price growth, for many prospective buyers the hot housing market will continue to exacerbate ongoing affordability challenges into the new year — and beyond,” CoreLogic said in a statement. “Though home price growth remains at historic highs, it is projected to slow over the next year. However, economic growth and inflation will most likely lead to increases in mortgage rates, which will further erode affordability.”

“Over the past year, we have seen one of the most robust seller’s markets in a generation,” said Frank Martell, president and chief executive officer of CoreLogic. “While increased interest rates may help cool down homebuying activity, we expect 2022 to be another strong year with continuing upward price growth.”

“Interest rates on 30-year fixed-rate mortgages averaged a record low of 2.96% during 2021, helping to keep monthly payments low in the face of record-high home prices,” said Frank Nothaft, chief economist at CoreLogic. “However, the Federal Reserve appears poised to allow interest rates to rise in 2022. Higher rates will intensify buyer affordability challenges, especially in overvalued local markets.”