Core Logic: Mortgage rates average a 7-year high
Despite high home prices, demand is strong for homeownership
Home prices continued to climb in May, according to the latest Home Price Index report from CoreLogic, a global property information, analytics and data-enabled solutions provider.
“The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes. During the first quarter, we found that about 50% of all existing homeowners had a mortgage rate of 3.75% or less,” CoreLogic Chief Economist Frank Nothaft said. “May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate.”
An analysis of home values in the country’s 100 largest metropolitan areas based on housing stock indicates 40% of metropolitan areas had an overvalued housing market as of May 2018, CoreLogic reported.
Another 26% of the top 100 metropolitan areas were undervalued, while 34% were at value. When looking at only the top 50 markets, 52% were overvalued, 14% were undervalued and 34% were at-value.
Several states posted double-digit increases in their 12-month price growth, including Utah at 12.9%, Washington at 12.8%, Nevada at 12.4% and Idaho at 11.2%.
The national home-price index is projected to increase by 5.1% from May 2018 to May 2019, according to the CoreLogic HPI Forecast.
The forecast is an econometric model that projects calculations from analyzing state-level forecasts, which are measured by the number of owner-occupied households for each state.
As of May, the report indicates that despite financial obstacles, there is a strong demand for homeownership.
“The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and purchase a home,” CoreLogic President and CEO Frank Martell said. “Even in the most expensive markets, we found four times as many renters looking to buy than homeowners willing to sell. Until more supply becomes available, we will continue to see soaring prices in cities such as Denver, San Francisco and Seattle.”
Source: Housing Wire