Home price gains accelerated for the
fourth straight month in February with a 4.1 percent annual increase in the
CoreLogic Home Price Index (HPI) The 12-month rate of appreciation in January
was 4.0 percent. The company said home prices nationwide, including distressed
sales, rose 0.6 percent from January to February, up from growth of 0.1 percent
the previous month.
"Before the onset of the pandemic, the
quickening of home price growth during the first two months of 2020 highlighted
the strength of purchase activity," said Dr. Frank Nothaft, chief economist at
CoreLogic. "In February, the national unemployment rate matched a 50-year low,
mortgage rates fell to the lowest level in more than three years and for-sale
inventory remained lean, all contributing to the pickup in value growth."
CoreLogic said it has been monitoring shifts in the housing market and
economy as the pandemic has grown. They have seen home-purchase mortgage
application increase in January and through the end of February as prospective
buyers took advantage of record-low interest rates. However, purchase activity
slowed in the latter half of March as unemployment began to rise and local
shelter-in-place directives led to cancellations of open houses.
Frank Martell, President and CEO of
CoreLogic said, "The nearly 10-year-old recovery of the U.S. housing market has
run headlong into the panic and uncertainty from the global COVID-19 pandemic.
In terms of home value trends, we are in uncharted territory as we battle the
outbreak with measures that are generating a never-before-seen, rapid downshift
in economic activity and employment. We expect that many homeowners will
initially be somewhat cushioned by government programs, ultra-low interest
rates or have adequate reserves to weather the storm. Over the second half of
the year, we predict unemployment and other factors will become more
pronounced, which will apply additional pressure on housing activity in the
medium term."
The CoreLogic HPI Forecast indicates
that home prices will increase by 0.5 percent from February 2020 to March 2020.
The company does not appear to have made a prediction for prices over the next
12 months. Homes that settle during March will largely reflect purchase
contracts that were signed in January and February, before the coronavirus
(COVID-19) outbreak. The HPI Forecast for February was produced with
projections for economic variables available prior to mid-March and does not
incorporate subsequent deterioration in the economy.
CoreLogic says that one-third of the country's 100 largest metropolitan
areas have an overvalued housing stock as of February 2020. The CoreLogic
Market Conditions Indicators (MCI) indicates that 29 percent of the areas were undervalued,
and 38 percent were at value. The MCI analysis categorizes home prices in
individual markets as undervalued, at value or overvalued by comparing home
prices to their long-run, sustainable levels, which are supported by local
market fundamentals such as disposable income. The MCI analysis defines an
overvalued housing market as one in which home prices are at least 10 percent
higher than those levels while an undervalued housing market is one in which
home prices are at least 10 percent below it.