CoreLogic: Home prices continue to climb in February

Dive Brief:

Home prices in the U.S. rose 1% from January to February and were up 7% year-over-year, according to the latest CoreLogic Home Price Index. The increases follow similar growth reported for the past few months.
CoreLogic forecasts home prices to climb 4.7% from February 2017 to February 2018, roughly on par with the annual increase forecast in January. Home prices are expected to increase 0.4% from February 2017 to March 2017.
Nine states saw home prices rise above the national rate year-over-year in February: Arizona (7.1%), Colorado (9.1%), Florida (7.2%), Idaho (8.8%), New Hampshire (7.3%), Oregon (10%), Utah (8.7%), Vermont (7.5%) and Washington (11.1%) — up from seven states above the national rate in January.

Dive Insight:

Home prices are continuing their upward trend, though forecasts indicate the potential for the rate of increase to taper in some markets soon.

CoreLogic's latest report follows the S&P CoreLogic Case–Shiller U.S. National Home Price Index for January released last week, which reported nationwide home-price increases of 5.9% in January. Its composite index of 20 major U.S. cities saw a 5.7% year-over-year growth rate, suggesting that excess inventory or population shifts in some larger markets could cause price growth to slow slightly. Still, booming West Coast markets with tight inventories, including Seattle and Portland, OR, posted the largest annualized price gains.

Rising mortgage rates and another 25-basis-point increase in the benchmark for such rates by the Federal Reserve stand to further raise the barriers to homeownership for new buyers. Though analysts say strong market fundamentals will support the demand for housing, rate hikes could reduce financing activity and keep existing owners from trading up.

However, in its quarterly Home Price Expectations Survey, real estate listing website Zillow said it doesn't expect rising rates to significantly impact housing activity until they reach 5.5%. The conventional 30-year fixed mortgage rate is expected to be roughly 4.75% by the end of 2017.

For more housing news, sign up for our daily residential construction newsletter.