Prospective homebuyers felt the strain of growing affordability hurdles as home prices maintained their upward trajectory in November, according to recent data from CoreLogic.
The organization released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ on Jan. 4, which found that home prices climbed 18.1% in November 2021 compared to the same period in 2020. Monthly price appreciation also ticked up by 1.3% from October to November last year.
Despite the surging price gains in 2021, experts suggest that home price appreciation will slow to a 2.8% increase by November 2022.
– Prices for detached properties saw a YoY increase of 19.4%, while attached properties increased by 13.6%.
– Naples, Florida, and Twin Falls, Idaho were the top two markets with the highest YoY price increases at 36.7% and 33.3%, respectively.
– The Southeast and Mountain West regions dominated the top spot on the state level, with Arizona leading the way with a 28.6% increase in price.
– Florida and Idaho ranked second and third place with 25.8% and 25.5% increases.
What it means:
The housing market stayed busy throughout 2021 as the supply-demand imbalance and historically low mortgage rates left buyers frenzied for a limited inventory nationwide.
While the frenzy was a boon for sellers who reaped the benefits from a record-breaking year for U.S. home price growth, the hot housing market will continue to exacerbate ongoing affordability challenges for prospective buyers in 2022, according to CoreLogic experts.
“Over the past year, we have seen one of the most robust seller’s markets in a generation,” said Frank Martell, president and CEO of CoreLogic, in a statement. “While increased interest rates may help cool down home-buying activity, we expect 2022 to be another strong year with continuing upward price growth.”
Though home price growth remains at historic highs, CoreLogic expects things to slow over the next year, especially as economic growth and inflation are slated to apply upward pressure on mortgage rates, which will further erode affordability.
“Interest rates on 30-year fixed-rate mortgages averaged a record low of 2.96% during 2021, helping to keep monthly payments low in the face of record-high home prices,” said Dr. Frank Nothaft, chief economist at CoreLogic, in a statement. “However, the Federal Reserve appears poised to allow interest rates to rise in 2022. Higher rates will intensify buyer affordability challenges, especially in overvalued local markets.”
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to [email protected].