Home prices in the U.S. continued their growth pattern, rising 1.6% from February to March and up 7.1% year-over-year, according to the latest CoreLogic Home Price Index.
CoreLogic forecasts home prices to climb 4.9% from March 2017 to March 2018, which aligns roughly with the annual increase predicted in February. Home prices are expected to increase 0.6% from March 2017 to April 2017.
- Seven states saw home prices climb above the national rate year-over-year in March: Arizona (7.3%), Colorado (8.7%), Idaho (8.4%), Oregon (9.4%), Rhode Island (7.4%), Utah (9.9%) and Washington (12.8%) — down from nine states above the national rate in February.
Despite tight inventory and elevated home prices, strong demand has 2017 gearing up to be the fastest-selling year on record, according to Redfin.
The home-price growth is being fueled by high demand, supported by stronger employment, population growth and still-affordable mortgage rates, according to CoreLogic. However, continued price increases could stand to dampen future demand with growth forecast to near 5% over the next year and the index expected to hit its previous high in the second half of 2017.
West Coast markets where price growth has been the strongest could experience a modest taper, while other markets may see a deceleration as populations shift out of certain metropolitan areas in search of more affordable housing.
Along with home-price gains, rising mortgage rates and a second, 25-basis-point increase by the Federal Reserve for the benchmark on such rates also stand to deflate buyer prospects in the coming months. Though strong market fundamentals could buoy demand, rate growth could slow down financing activity and prevent existing owners from trading up to newer, larger properties.