Subdued home price growth estimates for 2017 are increasing as end-of-year data becomes available, indicating a slight slowing of movement in the year ahead.
CoreLogic, most recently, bumped up its price projection to 4.7 percent year-over-year based on November 2016 prices, which were 1.1 percent higher month-over-month and 7.1 percent higher year-over-year. The 4.7 percent projection is an increase from CoreLogic’s 4.6 percent projection given in October.
“Last summer’s very low mortgage rates sparked demand, and with for-sale inventories low, the result has been a pick-up in home price growth,” says Dr. Frank Nothaft, chief economist for CoreLogic. “With mortgage rates higher today and expected to rise even further in 2017, our national Home Price Index [HPI] is expected to slow to 4.7 percent year-over-year by November 2017.”
Mortgage rates exceeded 4 percent for the first time in 2016 at the end of November, and have continued to tread upward since, with the Federal Reserve’s decision to raise the key interest rate in December impacting the climb. The 30-year fixed-rate mortgage closed out 2016 at an average 4.32 percent, according to Freddie Mac.
Demand seen in the summer did not let up at the end of the year, during what would typically be a slow season for housing activity, says Jonathan Smoke, chief economist of realtor.com®.
“Since the election, demand seems to have intensified, possibly in reaction to a jump in mortgage rates, Smoke said in a recent data preview. “Now buyers seem to feel a sense of urgency as they face the threat of rates that may approach multi-year highs in the months ahead.”
Home prices, as measured by the CoreLogic Index, are expected to grow beyond their pre-recession peak by the end of this year.
“Home prices continue to march higher, with home prices in 27 states above their pre-crisis peak levels,” says Anand Nallathambi, president and CEO of CoreLogic. “Nationally, the CoreLogic Home Price Index remains 4 percent below its April 2006 peak, but should surpass that peak by the end of 2017.”