Home price growth in July soared a record-shattering 18 percent year over year, marking a decades-long high watermark and signaling that a cool-down period remains distant, according to data released Tuesday by CoreLogic.
The leap in home price growth, the highest since the property analytics company began tracking the metric in 1976, points to a housing market fueled by a historic lack of inventory and steep competition. The 1.8-percent month-over-month growth increase between June and July marks the largest uptick in years, according to the CoreLogic analysis.
“Home price appreciation continues to escalate as millennials entering their prime home buying years, renters looking to escape skyrocketing rents and deep pocketed investors drive demand,” CoreLogic CEO Frank Martell said in a statement. “On the supply side, it is also the result of chronic under building, especially of affordable stock. This lack of supply is unlikely to be resolved over the next 5 to 10 years without more aggressive incentives for builders to add new units.”
Twin Falls in Idaho and Bend in Oregon experienced the highest home price growth at 39.8 percent and 37.1 percent, with a home purchased in 2020 nearly doubling in price in today’s market. Statewide, Idaho and Arizona led price growth at 33.6 percent and 28.4 percent, respectively.
CoreLogic predicts such growth will slow to around 2.7 percent by July 2022 as the number of new listings once again goes up. At present, however, buying a home is proving to be out of reach for many, with rapid appreciation creating major challenges for first-time buyers and anyone competing with all-cash multiple offers. As some hold off on buying, market stagnation is a predictable result, according to the CoreLogic analysis.
“July’s annual home price growth was the most that we have ever seen in the 45-year history of the CoreLogic Home Price Index,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a press statement. “This price gain has far exceeded income growth and eroded affordability. In the coming months this will temper demand and lead to a slowing in price growth.”