Home prices are on the rise, according to a new report from CoreLogic. But what do those gains mean for the industry?
National home prices again rose in May, marking the 27th consecutive month of year-over-year gains, according to a new report from CoreLogic.
In Chicagoland, where the market is picking up after a slow first quarter, home prices increased an impressive 9.3 percent. Excluding distressed sales, prices rose by 9.6 percent.
Illinois as a whole saw similar gains, with home prices rising 7.7 percent since the same time last year. However, state levels still remain 22.2 percent below their July 2007 peak – 14.2 percent excluding distressed sales.
National Increases Follow Suit
While local markets throughout the country moved forward individually and at different rates, their collective gains have helped propel the national market even further towards an all-encompassing recovery. CoreLogic’s report found:
- Home prices rose 8.8 percent since May 2013.
- Prices are expected to continue rising into June by 0.8 percent – 0.7 percent excluding distressed sales.
- Over the next 12 months, prices are forecast to increase an additional 6 percent.
Higher Prices: Good or Bad
Perhaps the biggest takeaway from CoreLogic’s release was not the increases to home prices, which were still significant, but rather the pace at which they are increasing. Mark Fleming, the company’s chief economist, points out that even though prices rose nearly 9 percent year-over-year, the growth rate was down almost three percentage points from three months prior.
“The influences of modestly rising inventory and less than expected demand are causing price growth to moderate toward our forecasted expectations,” he says.
The implications of these widespread home price increases represent both good and bad news for real estate, according to CoreLogic President and CEO Ananda Nallathambi.
“While the rapid rise in prices over the past two years has lifted many homeowners out of negative equity, it has also become a negative factor in buying decisions for prospective purchasers weighing affordability concerns,” he says.
Nallathambi speculates that as we move further into the year, moderate price increases, assuming they remain at forecasted levels, could and should help foster a continued recovery.