In May, home prices rose by 4.8 percent year over year. According to the latest data from property analytics provider CoreLogic, the numbers reflect both the pent-up demand for housing during spring’s lull and the low inventory of homes on the market.
“Home-purchase activity, bolstered by record-low interest rates, continues to exceed expectations despite the severe recession,” said Frank Martell, president and CEO of CoreLogic, in a prepared statement. “Pent-up buyer demand was delayed from spring to summer and is reflected in the latest price data. But with elevated unemployment, purchase activity and home prices could fall off after summer.”
Despite the high growth seen now, experts still anticipate the housing downturn to come sometime this year — the high levels of unemployment and financial insecurity caused by the coronavirus outbreak will inevitably affect the housing market. CoreLogic expects home prices to drop 0.1 percent by June and 6.6 percent by the same time next year. Any market stalls seen in the summer could extend into the fall and winter.
And even with strong nationwide numbers seen presently, home prices fluctuate widely from city to city. While home prices in Philadelphia rose by 7.7 percent year over year, San Francisco saw only 1.1 percent growth. Parts of Arizona, Alabama and Florida are most likely, according to CoreLogic, to see upcoming drops in home values.
“Pending sales and home-purchase loan applications are higher than in June of last year and reflect the buying activity of millennials,” said Dr. Frank Nothaft, chief economist at CoreLogic, in a prepared statement. “By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession.”