U.S. home prices rose 7% in March, compared with the same month a year ago, according to data from CoreLogic released Tuesday in its Home Price Insights monthly report. The research firm had previously forecast that prices would remain flat year over year. The data include sales of distressed properties.
Since the housing market bottomed out in March 2011, the CoreLogic index has risen by 52.2%. As of March, home prices are now 1.8% higher than they were at the April 2006 pre-crash peak.
Month over month, March prices rose 1.4%, including distressed home sales. CoreLogic expects housing prices to rise by 5.2% year over year by March 2019 and to increase by 0.1% month over month in March 2018.
CEO Frank Martell noted:
The dream of home ownership continues to fade away for the average prospective buyer. Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis progressively worse. CoreLogic’s Market Condition Indicators now indicate that half of the top 50 markets in the country are overvalued because home prices in those areas have risen so much faster than incomes. This is clearly an unsustainable condition that can only be remedied by aggressive and coordinated public/private sector actions.
Chief economist Frank Nothaft added:
Home prices grew briskly in the first quarter of 2018. High demand and limited supply have pushed home prices above where they were in early 2006. New construction still lags historically normal levels, keeping upward pressure on prices.
Including distressed sales, home prices rose the most year over year in Nevada and Washington (12.6%), Idaho (12.3%) and Utah (11.2%).
Through March, 28% of the top 100 metropolitan areas were undervalued and 35% were at value. When looking at only the top 50 markets based on housing stock, 50% were overvalued, 14% were undervalued and 36% were at value. CoreLogic defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.