While May home prices increased, according to the latest CoreLogic Home Price Index (HPI™) and HPI Forecast™, this summer could experience a cooldown. In May, home prices increased by 4.8 percent on a national level YoY. From April, they increased 0.7 percent.
The local markets varied widely. In Philadelphia, for example, single-family home prices increased 7.7 percent in May YoY, but in San Francisco, they only increased 1.1 percent.
By June, however, CoreLogic expects price growth to stall and stay that way through the summer. According to the CoreLogic HPI Forecast, month-over-month, prices may decrease 0.1 percent in June, and they could decrease by 6.6 percent by May 2021. Areas with a tourism economy could get hit harder; Las Vegas home prices are expected to decline by 20.1 percent by May 2021. Meanwhile, where market conditions are considered normal, the decline should be smaller, as in San Diego, where home prices are anticipated to drop by just 1.3 percent in the next 12 months.
The CoreLogic Market Risk Indicator (MRI) predicts that the following areas will experience a decline in home prices in the next 12 months: Prescott, Ariz.; Lake Havasu, Ariz.; Daphne-Fairhope-Foley, Ala.; and Naples and Crestview-Fort Walton Beach, Fla.
“Pending sales and home-purchase loan applications are higher than in June of last year and reflect the buying activity of millennials,” said Dr. Frank Nothaft, chief economist at CoreLogic. “By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession.”
“Home-purchase activity, bolstered by record-low interest rates, continues to exceed expectations despite the severe recession,” said Frank Martell, president and CEO of CoreLogic. “Pent-up buyer demand was delayed from spring to summer and is reflected in the latest price data. But with elevated unemployment, purchase activity and home prices could fall off after summer.”
For more information, please visit www.corelogic.com.