U.S. home prices rose 4% in December compared with the same month a year ago, according to data from CoreLogic released Tuesday in the firm’s Home Price Insights monthly report. The data includes sales of distressed properties.
Home prices rose 0.3% month over month in November. On a year-over-year basis, the index has increased every month since February 2012 and is up 63% since bottoming out in March 2011.
Price appreciation averaged 3.6% for full-year 2019, significantly slower than the 2018 average of 5.8%. The full-year average for 2020 is expected to climb to 4.6%.
CoreLogic forecasts housing prices to rise by 0.1% month over month in January and by 5.2% year over year in December 2020.
As of December 2019, home prices are now about 9.8% higher than they were at the April 2006 pre-crash peak. Adjusted for inflation, however, home prices remain about 11.5% below the peak.
CEO Frank Martell noted:
On a national level, home prices are on an upswing. Price growth is likely to accelerate in 2020. And while demand for homeownership has continued to increase for millennials, particularly those in their 30s, 74% admit they have had to make significant financial sacrifices to afford a home. This could become an even bigger factor as home prices reach new heights during 2020.
CoreLogic Chief Economist Frank Nothaft added:
Moderately priced homes are in high demand and short supply, pushing up values and eroding affordability for first-time buyers. Homes that sold for 25% or more below the local median price experienced a 5.9% price gain in 2019, compared with a 3.7% gain for homes that sold for 25% or more above the median.
Including distressed sales, December home prices rose the most year over year in Idaho (9.9%), Maine (7.9%) and Wyoming (7.7%). Year over year, home prices rose in every state.
Through December, housing stock in 34% of the top 100 metropolitan areas was overvalued, 27% were undervalued and 38% were at value. In just the top 50 markets based on housing stock, 40% were overvalued, 20% were undervalued and 40% 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, Washington, D.C., posted the largest year-over-year index change, up 4.5% in December. Denver prices rose 3.5% and Houston prices rose 3.5%, while Los Angeles and Boston saw prices rise 3.3% to round out the top five.
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