Inventory deficiency and affordability issues kept sales down and hampered home price growth, according to CoreLogic.
Home prices rose 4.7% year-over-year in December and 0.1% month-over-month. The housing market is expected to remain flat in the coming year, with a projected annual home price growth of 4.6% in December 2019. The mortgage rate rises of 2018 decelerated sales which led to a moderating in prices.
“The slowdown in the rate of home price appreciation reflects the impact of inventory shortages and growing affordability issues in many markets,” said Frank Martell, president and CEO of CoreLogic. “On the positive side, if home-price growth continues to moderate, interest rates remain stable and household incomes rise in 2019, it could help renters and first-time buyers to take the plunge and realize the dream of owning a home.”
The states with December’s top year-over-year home price changes were all in the Mountain West region. Idaho saw the highest growth with 11.7%, Nevada, at 10.8%, was second and Utah, at 8.7%, was third.
North Dakota had the lowest price growth at negative-1.1%. Louisiana was the only other state to dip into the negatives, at 0.3%, and Delaware’s 0.9% rounded out the bottom three.
“Higher mortgage rates slowed home sales and price growth during the second half of 2018,” Frank Nothaft, chief economist at CoreLogic, said in a press release. “Annual price growth peaked in March and averaged 6.4% during the first six months of the year. In the second half of 2018, growth moderated to 5.2%. For 2019, we are forecasting an average annual price growth of 3.4%.”
Of the nation’s top 50 metropolitan areas based on housing stock, 40% were considered overvalued in December — at least 10% above the long-term, sustainable level in a given market. About 42% were at value and the remaining 18% were undervalued.