CoreLogic: Annual price growth at 18.5% in December, averaged at 15% over 2021

If you were expecting competition fatigue, new inventory and the threat of rising interest rates to have an impact on the rapid rate of home price appreciation, well, it hasn’t quite happened just yet.

According to CoreLogic’s latest Home Price Index (HPI) report, home prices nationwide increased 18.5% year over year and 1.3% month over month in December, continuing the torrid pace of price growth the market has seen for more than a year. For full-year 2021, price appreciation averaged 15% up from 2020’s average of 6%. Price gains in 2021 began at an already robust 10% in the first quarter, mounting to 18% by the year’s final three months.

Moving forward, CoreLogic still expects the aforementioned factors to help bring price appreciation to in line with more historical norms, though annual gains are projected to remain above 10% to start 2022. By December of this year, however, CoreLogic predicts price growth to moderate to around 3.5% year over year; for full-year 2022, the HPI Forecast calls for an annual average price gain of 9.6%.

As to whether a housing bubble is forming, CoreLogic’s Market Risk Indicators metrics indicate otherwise. CoreLogic instead sees a small probability of a nationwide price drop, instead suggesting that it’s likelier that a few particular “at-risk” markets could see prices dip over the next 12 months.

“Much of what we’ve seen in the run-up of home prices over the last year has been the result of a perfect storm of supply and demand pressures,” said Dr. Frank Nothaft, chief economist at CoreLogic. “As we move further into 2022, economic factors – such as new home building and a rise in mortgage rates – are in motion to help relieve some of this pressure and steadily temper the rapid home price acceleration seen in 2021.”

December’s price trends were in line with several long-running tendencies over the past few months. With buyers continuing to favor space and amenities over density during the pandemic era, yearly price growth of detached properties (19.7%) was 5.5 percentage points higher than that of attached properties (14.2%), though both registered strong increases. Home price growth continued to be sharpest in the West and South with Arizona leading all states at 28.4% year to year, followed by Florida (27.1%) and Utah (25.2%).

On a metro level, Naples, Florida saw the highest annual price increase at 37.6%. Among large cities, Phoenix again led the way at 30.2%. Interestingly, two of the markets identified by CoreLogic as most at-risk are also in Arizona: Prescott and Lake Havasu-Kingman, both of which CoreLogic put above a 70% probability of a year-over-year price decline with a confidence score of 50-75%.


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