New figures show that US house prices have recorded their smallest annual increase in nearly four years.
According to the latest CoreLogic data, while US house prices still logged a 5.1 per cent annual gain in November, this was the smallest recorded annual increase since August 2015.
North Dakota was the only state to show a year-over-year decline in prices during November, while Idaho and Nevada were the only two states to record double-digit growth in the same period.
According to the CoreLogic data, a rise in mortgage rates is the key factor to the slowing price growth.
“The rise in mortgage rates has dampened buyer demand and slowed home-price growth,” said Dr Frank Nothaft, a chief economist for CoreLogic. “Interest rates for new 30-year fixed-rate loans averaged 4.9 per cent during November – the highest monthly average since February 2011. These higher rates and home prices have reduced buyer affordability. Home sellers are responding by lowering their asking price, which is reflected in the slowing growth of the CoreLogic Home Price Index.”
It is a trend that looks set to continue. The CoreLogic House Price Index Forecast indicates home prices will increase by 4.8 per cent on a year-over-year basis from November 2018 to November 2019. On a month-over-month basis, home prices are expected to decrease by 0.8 percent from November to December 2018.
This could mean that the US property market actually becomes a buyer’s market in 2019, as sellers are forced to drop asking prices in a bid to make a sale.
At Present, the CoreLogic data found that when looking at only the top 50 markets based on housing stock, 44 per cent were overvalued, 18 per cent were undervalued and 38 percent were at value. The analysis defines an overvalued housing market as one in which home prices are at least 10 per cent above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10 per cent below the sustainable level.
Article published 17th January 2019