U.S. home prices rose 6.6% in December from the same month a year ago, according to firm CoreLogic. The research firm had previously forecast a rise of 6.8%, slightly lower than 7% gains recorded in each of the past three months. The data include sales of distressed properties.
Month over month, December prices rose 0.5%, including distressed home sales. CoreLogic expects December housing prices to rise by 4.3% year over year by December 2018 and to dip by 0.4% month over month in January 2018.
CEO Frank Martell noted:
Home prices continue to rise as a result of aggressive monetary policy, the economic and jobs recovery and the lack of housing stock. The largest price gains during 2017 were in five Western states California, Idaho, Nevada, Utah, and Washington. As home price and the cost of originating loans rise, affordability continues to erode, making it more challenging for both first-time buyers and moderate-income families to buy. At this point, we estimate that more than one-third of the 100 largest metropolitan areas are overvalued.
Chief Economist Frank Nothaft added:
The number of homes for sale has remained very low. Job growth lowered the unemployment rate to 4.1 percent by year’s end, the lowest level in 17 years. Rising income and consumer confidence has increased the number of prospective homebuyers. The net result of rising demand and limited for-sale inventory is a continued appreciation of home prices.
Including distressed sales, home prices rose the most year over year in Washington (12.0%), Nevada (11.0%), Idaho (10.7%), Utah (10.7%) and California (8.2%).
CoreLogic also reported year-over-year home price changes in selected metro areas, along with a note on whether prices were fairly valued:
- Las Vegas: up 11.2%; overvalued
- San Francisco: up 10.1%; at value
- Denver: up 8.1%; overvalued
- Los Angeles: up 7.8%; overvalued
- Boston: up 5.9%; at value
- New York City: up 4.1%; overvalued
- Chicago: up 3.7%; at value
- Houston: up 3.7%; overvalued
- Miami: up 3.6%; overvalued
- Washington, D.C.: up 3.4%; overvalued
The states where home prices posted the smallest index gains were Alaska (1.6%), Oklahoma (1.7%), Connecticut (1.9%), District of Columbia (2.5%) and Virginia (2.7%).
The CoreLogic December report is available at the firm’s website.