Dive Brief:
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U.S. home prices continue to climb, rising 1.2% from April to May and 6.6% year-over-year, according to the latest CoreLogic Home Price Index.
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CoreLogic estimates home prices will increase 5.3% by May 2018, keeping in line with a steady lift in home-price growth forecasts since January. Prices are expected to increase 0.9% from May to June.
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Eight states saw home prices climb above the national year-over-year rate of increase in May: Colorado (9.7%), Idaho (8.4%), Michigan (6.8%), Nevada (7.3%), New York (7.5%), Oregon (9.0%), Utah (10.4%) and Washington (12.6%).
Dive Insight:
The steady run-up in prices, though a boon for home equity, continues to be a drag on renters and prospective buyers, according to CoreLogic. The persisting inventory shortage is fueling strong price gains, keeping would-be buyers in the rental market, driving up price growth in that segment, too.
Black Knight Financial Services reported that home prices had reached an all-time high of $275,000 in April, up 3.6% from the beginning of the year. Prices increased in the 20-largest U.S. states and 40-biggest metros.
Such price growth has tightened the market for existing homes, particularly in the entry-level category. The number of existing homes has contracted year-over-year every month for the last two years as demand continues to outstrip supply. New home inventory hasn’t fared much better, but its expansion and contraction has been more variable.
Meanwhile, the net share of Americans who say now is a good time to buy has reached a record low, dropping 8 percentage points in May, according to Fannie Mae's monthly Home Purchase Sentiment Index. The net share who reported now is a good time to sell, however, climbed 6 percentage points to reach an index high.
While new- and existing-home sales were up in May, both fell short of analyst predictions for the month. Pending-home sales, representing the number of under-contract homes in the U.S., dropped for a third-straight month in May.
Heightened competition for limited supply will drive home price growth for the foreseeable future, unless builders are able to catch up to demand — though weak housing starts numbers and a lag in building permit authorizations in May suggest those firms will continue to struggle to do so.