The latest iteration of CoreLogic’s Home Price Index (HPI) report revealed that home prices nationwide jumped 10.4% year over year in February, the largest annual price increase recorded on the index since April 2006.
Price gains surpassed 10% for the first time since 2013, CoreLogic noted, exceeding the prior month’s HPI gain of 9.69%. Prices continue to be driven markedly upward by precariously low for-sale inventory, with the National Association of Realtors (NAR) reporting last month that total housing inventory at the end of February sat at just 1.03 million units nationwide.
Additionally, low but rising mortgage rates have enticed more prospective buyers into the market, pushing prices up further. With appreciation at such a rapid clip, affordability constraints may soon slow price growth later in the year, though some house hunters may find themselves getting priced out in the near term.
“Homebuyers are experiencing the most competitive housing market we’ve seen since the Great Recession,” said CoreLogic President and CEO Frank Martell. “Rising mortgage rates and severe supply constraints are pushing already-overheated home prices out of reach for some prospective buyers, especially in more expensive metro areas.”
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“The run-up in home prices is good news for current homeowners but sobering for prospective buyers,” concurred Frank Nothaft, chief economist for CoreLogic. “Those looking to buy need to save for a down payment, closing costs and cash reserves, all of which are much higher as home prices go up.
“Add to that a rise in mortgage rates and the affordability challenge for first-time buyers becomes even greater.”
First-time buyers looking for affordability at the entry-level end of the market are already facing a price crunch, with the HPI reporting that home price growth in the bottom price tier rose 14.2% year over year in February. That’s the highest rate of acceleration since 2005. In comparison, the low-to-middle price tier increased 12.4% year over year, the middle-to-moderate tier rose 11.6% and the highest price tier grew 11.0% — all the highest rates of appreciation since 2006.
Price gains were broad-based geographically, with no states logging a February decrease in home prices. Idaho saw the largest year-over-year price increase at 22.6%, followed by Montana at 19.5% and South Dakota at 17.1%.
