CoreLogic’s newly released U.S. Home Price Insights report, which evaluates April data and makes monthly and yearly projections, forecasts month-over-month price growth but predicts a 1.3% annual decline.
Prices grew 1.4% from March to April per the company’s numbers, boosted by increased home sales pre-pandemic during the year’s first quarter. With purchase activity slowing considerably as the outbreak took hold stateside, prices are expected to keep growing from April to May, though at a slower pace of 0.3%.
The yearly slide, though, marks the first time in more than nine years that CoreLogic has expected home prices to decline annually. The last time the company anticipated a retreat in year-over-year home prices was January 2012.
It’s a stark contrast to this year’s April, which saw home prices nationwide increase 5.4% year over year — even with the coronavirus pandemic exerting downward pressures all over the housing market.
“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring,” said CoreLogic chief economist Frank Nothaft. “If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states.”
A handful of markets were identified by CoreLogic as exhibiting particularly high risk of price decline over the next 12 months. Some, such as Prescott, Arizona (above 60% probability of price decrease); Cape Coral-Fort Myers, Florida (above 60%); and North Port-Sarasota-Bradenton, Florida (40-60%) are typically vacation destinations, expected to see property values fall as visitors stay home and rental properties are sold. Others have already been hit hard by the oil and gas downturn, like Huntington, West Virginia (above 60%), or are located in areas dependent on the energy industry, like College Station, Texas (above 60%).
Still, Frank Martell, CoreLogic president CEO, was cautiously upbeat about the market despite acknowledging that “the next 12 to 18 months are going to be very tough times for the broader economy.”
“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term. … As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery,” Martell said.