Dive Brief:
- U.S. home prices, including distressed sales, increased 2.1% between February and March and 6.7% between March 2015 and March 2016, CoreLogic reported in its Home Price Index Tuesday.
- CoreLogic predicted home prices will rise 0.7% between March and April, and 5.3% between March 2016 and March 2017.
- March's 2.1% price gain was significantly higher than CoreLogic's prediction last month of a 0.6% increase.
Dive Insight:
Anand Nallathambi, president and CEO of CoreLogic, noted that since home prices hit their low five years ago, prices have appreciated nearly 40%, with the West seeing the strongest appreciation.
"Housing helped keep U.S. economic growth afloat in the first quarter of 2016 as residential investment recorded its strongest gain since the end of 2012," CoreLogic Chief Economist Frank Nothaft said in a release. "Low interest rates and increased home building suggest that housing will continue to be a growth driver."
Despite the positive effect of rising prices for residential investment and homeowners looking to sell, the surging cost of buying a home has priced a significant percentage of potential first-time buyers out of the market. A March Trulia report found that starter home inventory declined nearly 44% over the last four years and that the segment's prices have risen 5.6%.
The National Association of Realtors also reported in March that the "unshakably low supply levels and steadfast price growth" continue to hinder stronger growth in the housing market. However, some builders have countered that the "regulatory burden" is keeping them from pumping up inventory — which would in turn slow down price growth. The National Association of Home Builders testified to Congress that regulations can add up to 25% to the cost of building a home.
