Dive Brief:
- U.S. home prices, including distressed sales, rose 1.3% between April and May and 5.9% between May 2015 and May 2016, CoreLogic reported in its Home Price Index Tuesday.
- CoreLogic also predicted home prices will rise 0.8% between May and June, and 5.3% between May 2016 and May 2017.
- May's 1.3% price gain was higher than CoreLogic's prediction last month of a 0.9% increase.
Dive Insight:
CoreLogic Chief Economist Frank Nothaft said the steady price growth is due to fast-paced resale activity and the limited supply of available homes on the market. "Housing remained an oasis of stability in May with home prices rising year over year between 5 percent and 6 percent for 22 consecutive months," he said in a release.
Nothaft added that shaky global financial markets will likely result in consistently low mortgage rates — a trend that will add more fuel to the housing market's growth. His prediction echoes expert reactions after the Brexit vote in June, which they said would keep interest rates low and encourage potential homebuyers to jump into the market.
Despite the fact that rising home prices signal good news for builders and the broader economy, potential homebuyers — especially first-timers — have struggled to find properties within their budgets. Zillow reported last month that starter home prices grew at double the pace of high-end homes between May 2015 and May 2016. That price increase was due largely to the major dip in starter-home inventory, which has led to intense competition for available homes on the market.
