Coupled with higher rates, rising prices have reduced homebuyer activity
Home prices increased across the US on both year-over-year and month-over-month bases in October, according to the Home Price Index released by CoreLogic.
The HPI found that prices increased nationally by 5.4% from October 2017. Prices increased by 0.5% in October from revised September data.
“Rising prices and interest rates have reduced homebuyer activity and led to a gradual slowing in appreciation,” CoreLogic Chief Economist Frank Nothaft said. “October’s mortgage rates were the highest in seven and a half years, eroding buyer affordability. Despite higher interest rates, many renters view a home purchase as a way to build wealth through home-equity growth, especially in areas where rents are rising quickly. These include the Phoenix, Las Vegas, and Orlando metro areas, where the CoreLogic Single-Family Rent Index rose 6% or more during the last 12 months.”
The CoreLogic HPI Forecast indicated home prices will increase by 4.8% on a year-over-year basis by October 2019. On a month-over-month basis, home prices are expected to decrease by 0.7% from October to November.
“Homeownership remains an important part of the American dream,” CoreLogic President and CEO Frank Martell said. “Our research found that being a homeowner makes consumers feel safe in their homes. Renters really want something to call their own. However, until affordability comes back into balance, renters will have a hard time purchasing a home.”
