Home price growth in October increased annually to the tune of +5.4% and 0.5% from September 2018, according to the latest CoreLogic Home Price Index and Forecast report. This report tagged the average price of a single-family home at $285,700.
For the last six years, inventory shortages and high demand have brought smiles to the faces of a great many sellers. Some of those sellers have been reluctant to list their homes in hopes that property values would continue to spiral upwards. But, according to CoreLogic, residual upward pricing spirals are coming to an end.
October 2018 was the fourth consecutive month in which home price growth fell below 6% y/y. CoreLogic estimates that home price growth will slow to 4.8% between now and September 2019.
Will this slowdown bring an end to our 6-year long sellers’ market and usher in a buyers’ market? Not so fast, say the powers that be at CoreLogic. Shifting over to a true buyers’ market may take months, if not years. (A buyers’ market is defined by having at least 6-months of inventory.)
According to Dr. Frank Nothaft, chief economist with CoreLogic, said “Rising prices and interest rates have reduced home buyer activity and led to a gradual slowing in appreciation. October’s mortgage interest rates were the highest in 7.5 years, eroding buyer affordability.”
Despite these rising home prices (though slower rising home prices) and rising mortgage interest rates, renters and first-time homebuyers still want in to homeownership.
“Homeownership remains an important part of the American dream,” said Frank Martell, president and CEO of CoreLogic. “Our research found that being a homeowner makes consumers feel safe in their homes. Renters really want something to call their own. However, until affordability comes back into balance, renters will have a hard time purchasing a home.”