May 2021 CoreLogic Home Prices: Torrid Demand And Scarce Inventory Fuels Double-Digit Home Price Growth

Converging pressures of severe inventory shortages and sustained demand pushed home prices to record highs in May, with the year-over-year increase in home prices at its highest level since 2005.

... demand and supply imbalances - fueled by a drop in mortgage rates to less than one-half what they were in 2005 and a scarcity of for-sale homes - has fed the latest run up in sales prices ...

Analyst Opinion of CoreLogic's HPI

Home prices are continuing to rise being exasperated by low inventory.

According to CoreLogic:

.... revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.

While many millennials and Gen Z home buyers continue to move into the hot market thanks to low borrowing rates, high prices are likely deterring increasing numbers of prospective buyers — especially first-time and low-income families. Currently, 82% of consumers note housing affordability as a key problem, according to a recent CoreLogic survey. Additionally, 33% of respondents noted they would wait to buy or not buy at all rather than make sacrifices on their purchase.

Dr. Frank Nothaft, chief economist at CoreLogic stated:

There are marked differences in today's run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent. However, demand and supply imbalances — fueled by a drop in mortgage rates to less than one-half what they were in 2005 and a scarcity of for-sale homes — has fed the latest run up in sales prices.

Top Takeaways:

  • Nationally, home prices increased 15.4% in May 2021, compared with May 2020. On a month-over-month basis, home prices increased by 2.3% compared to April 2021.
  • Appreciation of detached properties (17.2%) was nearly double that of attached properties (9.1%) in May as prospective buyers continue to seek out more space.
  • Home prices are projected to increase 3.4% by May 2022, as affordability challenges deter potential buyers and cause a slowdown in home price growth.
  • In May, home prices rose sharply in the west with Twin Falls, Idaho, experiencing the highest year-over-year increase at 35%. Coeur d'Alene, Idaho, ranked second with a year-over-year increase of 32%.
  • At the state level, Idaho and Arizona continued to have the strongest price growth at 30.3% and 23.4%, respectively. Utah also had a 20.4% year-over-year increase as home buyers seek out more affordable locations with lower population density and attractive outdoor amenities.
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