Property prices up almost 7% year on year in the US, latest index shows
Property prices increased by 6.7% year on year in the United States in February and by 1% month on month, according to the latest national index to be published.
It is the seventh month in a row that prices have increased and the data from property analysis firm Corelogic also shows that annual growth was led by Washington with a rise of 12.5%.
Looking ahead, the firm says that the national home price index is projected to continue to increase by 4.7% on a year on year basis from February 2018 to February 2019, with California leading the climb at a forecasted 10.3% annual growth.
The report shows that a number of western states have had hot housing markets. Idaho, Nevada, Utah and Washington all had home prices up more than 11% over the last year.
‘With the recent rise in mortgage rates, affordability has fallen sharply in these states, according to Frank Nothaft, chief economist for CoreLogic. ‘We expect home price growth to slow over the next 12 months, dropping to 5% to 6% in Idaho, Utah and Washington, and slowing to 9.6% in Nevada,’ he said.
An analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock shows that 34% of metropolitan areas have an overvalued housing market as of February 2018.
Additionally, as of February 2018 some 30% of the top 100 metropolitan areas were undervalued and 36% were at value. When looking at only the top 50 markets based on housing stock, 48% were overvalued, 18% were undervalued and 34% were at value.
‘Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new home buyers,’ said Frank Martell, chief executive of CoreLogic.
He pointed out that CoreLogic’s Market Conditions Indicator has identified nearly a half of the 50 largest metropolitan areas as overvalued. ‘Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth,’ he added.