Home prices in the U.S. rose 1.1% from October to November and were up 7.1% year-over-year, according to the latest CoreLogic Home Price Index. The monthly increases follow similar rates reported from September to October and from August to September.
CoreLogic forecast home prices to climb 4.7% from November 2016 to November 2017, up slightly from the 4.6% annual gain forecast in October. Home prices are expected to increase 0.1% from November 2016 to December 2016.
Seven states saw home prices rise from a year ago at or above the national rate: Colorado (8.8%), Florida (7.8%), Idaho (8.2%), New York (7.4%), Oregon (10.3%), Utah (7.6%) and Washington, (10.0%). That’s down from nine states at or above the national rate in October.
Strong demand driven by historically low mortgage rates, coupled with tight inventory conditions, has continued to put pressure on prices. However, recent rate increases and projections of future raises could hamper demand somewhat, effectively softening prices and accounting for the significantly lower home-price growth forecasted for 2017, CoreLogic Chief Economist Frank Nothaft said in a release.
The index currently sits 4% below its April 2006 peak and is expected to surpass that mark by the end of 2017. Meanwhile, 27 states posted home prices ahead of pre-crisis highs in November.
A report this fall from Realtor.com similarly forecasts a tapering in home-price growth this year. The real estate website’s chief economist, Jonathan Smoke, told Construction Dive in November that price increases should decelerate to 3.9% in 2017 from 4.6% in 2016, with depreciation of at least 1% in 46 of the 100-largest U.S. metros.
While low mortgage rates opened homeownership to more potential buyers, their increases could have the effect of reducing refinancing activity and trade-ups and cause mortgage-backed securities to be handled as longer-duration instruments, further raising rates, according to a report last month from the Urban Institute’s Housing Finance Policy Center.
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