Dive Brief:
- U.S. home prices, including distressed sales, increased 1.1% between May and June and 5.7% between June 2015 and June 2016, CoreLogic reported in its Home Price Index Tuesday.
- CoreLogic also predicted home prices will rise 0.6% between June and July, and 5.3% between June 2016 and June 2017.
- June's 1.1% price increase was higher than CoreLogic's prediction last month of a 0.8% bump.
Dive Insight:
CoreLogic Chief Economist Frank Nothaft said consistently low mortgage rates encouraged buyers and drove home purchases in June. "Home prices continue to increase across the country, especially in the lower price ranges and in a number of metro areas," he said in a release.
That trend of growing prices for homes — particularly in the starter-home market — has been an ongoing struggle, as first-time buyers can't find available homes in their price range. Entry-level home prices are rising at a faster pace than other types of homes in more than 50% of the nation's largest markets, due largely to a 10% year-over-year decline in available starter inventory, according to an April Zillow report. And Trulia found that inventory for available entry-level homes has declined 43.6% over the last four years, while prices increased 5.6%.
Shut out from homeownership, these potential buyers often stick with renting, but a Zillow report this week found that the median rent for the bottom one-third of the apartment market is rising faster than the overall U.S. rental market. With these rising rents, tenants are unable to save for a down payment, keeping them from eventually making the leap into homeownership.
