CoreLogic: Exceptionally strong demand, historically low supply and record-low mortgage rates combined to fuel the fastest home price growth since 2018.
July home prices were 5.5% higher across the country year-to-year, according to CoreLogic – up from the 4.3% annual gain seen in June.
The average rate on the popular 30-year fixed mortgage fell below 3% for the first time ever in July, giving buyers additional purchasing power. Exceptionally strong demand, historically low supply and record-low mortgage rates are combining to fuel the fastest home price growth since 2018.
“Lower-priced homes are sought after and have had faster annual price growth than luxury homes,” says CoreLogic Chief Economist Frank Nothaft. “First-time buyers and investors are actively seeking lower-priced homes, and that segment of the housing market is in particularly short supply.”
The National Association of Realtors® reports that the inventory of homes priced under $100,000 was down 32% year-to-year in July, while the supply of homes priced at $500,000 to $750,000 was down just 9%.
Home buying is gaining significant strength in more affordable suburban and rural areas as buyers seek more space for the new work-and-school-at-home economy. Home prices in San Francisco were less than 1% higher annually, while the Washington, D.C., metro area saw prices up over 5%.
CoreLogic economists predict that homes will stay positive in 2021 but that the gains will weaken as the initial surge of pandemic buying wanes. They say economies that rely heavily on tourism and entertainment, such as Las Vegas and Miami, could suffer the most.
Source: CNBC (09/01/20) Olick, Diana
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