Home prices continue to climb in September, as buyers and sellers remain wary

Dive Brief:

Home prices in the U.S. rose 1.1% from September to August 2016, according to the latest CoreLogic Home Price Index, and are up 6.3% from September 2015. The monthly gains are consistent with the growth rate reported from July 2016 to August 2016.
CoreLogic expects home prices to increase 5.2% from September 2016 to September 2017 and 0.3% from September 2016 to October 2016. Last month, however, CoreLogic forecast a 0.4% gain from August to September.
Colorado, Florida, Idaho, Nevada, New York, Oregon, South Dakota, Tennessee, Texas, Utah, Washington and West Virginia all posted year-over-year gains in the single-family Home Price Index that were greater than the average 6.3% increase nationally.

Dive Insight:

Home values have doubled in the last five years to $13 trillion, with each owner gaining an average equity of about $11,000, CoreLogic Chief Economist Frank Nothaft said in a release. Those high prices are making some buyers and sellers wary. A survey last month of potential home buyers and sellers from real estate listing website Redfin found that some sellers are reluctant to put their homes on the market, albeit at the current high prices, because they worry they either won’t be able to find another home that they can afford or that the home won’t sell before prices inevitably fall.

The U.S. homeownership rate is hovering near a 51-year low and has remained largely unchanged in the last year. Home prices, meanwhile, were up 5.1% in August 2016 year over year and are nearing their July 2006 peak, according to the latest S&P Core Logic Case-Schiller U.S. National Home Price Index.

It’s still early, but a shift toward first-time buyers re-entering the homebuying market is becoming apparent. First-time buyers took their largest share of existing home sales in more than four years in September, pushing the segment up 3.2% from August and 0.6% from a year ago.

And according to the latest National Association of Realtors’ 2016 Profile of Home Buyers and Sellers, first-timers accounted for 35% of home sales this year, up from 32% in 2015 and the most since 2013. Individuals under the age of 35 — members of the millennial generation — accounted forsix in 10 first-time buyer transactions, although the homeownership rate for that group remains at a historical low.