U.S. home prices rose 4% in February compared with the same month a year ago, according to data from CoreLogic released Tuesday in the research firm’s Home Price Insights monthly report. The data include sales of distressed properties.
Home prices rose 0.7% month over month in February. On a year-over-year basis, the index has increased every month since February 2012 and is up nearly 58% since bottoming out in March 2011.
CoreLogic expects housing prices to rise by 4.7% year over year in February 2020 and to drop by 0.5% month over month in March of next year.
As of February, home prices were about 6% higher than they were at the April 2006 pre-crash peak. Adjusted for inflation, however, home prices remain about 12.9% below the peak.
CEO Frank Martell noted:
About 40 percent of the top 50 largest metropolitan areas in the country are now categorized as overvalued and we expect that percentage to grow over the remainder of 2019. The cost of either buying or renting in expensive markets puts a significant strain on most consumers. Our research tells us that about 74 percent of millennials, the single largest cohort of homebuyers, now report having to cut back on other categories of spending to afford their housing costs.
Chief Economist Frank Nothaft added:
During the first two months of the year, home-price growth continued to decelerate. This is the opposite of what we saw the last two years when price growth accelerated early. With the Federal Reserve’s announcement to keep short-term interest rates where they are for the rest of the year, we expect mortgage rates to remain low and be a boost for the spring buying season. A strong buying season could lead to a pickup in home-price growth later this year.
Including distressed sales, home prices rose the most year over year in Idaho (10.2%), Nevada (8.9%) and Utah (8.7%).
Through February, 35% of the top 100 metropolitan areas were overvalued, 27% were undervalued and 38% were at value. In just the top 50 markets based on housing stock, 40% were overvalued, 18% were undervalued and 42% 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.
Among U.S. metro areas, Las Vegas has posted the largest year-over-year index change, up 9.2%. Denver is up 4.7% with Miami (up 3.7%), Houston (up 3.4%) and Los Angeles (up 3.2%) rounding out the top five.
Check out CoreLogic’s February report for more detail.