The ongoing housing inventory crunch created a standoff between buyers and sellers, leading to a surge in April home prices, according to CoreLogic.
The Home Price Index shot up 13% annually in April and 2.1% from March. It represents the third straight month of double-digit year-over-year growth and is the index’s largest since February 2006. April’s growth was nearly triple the adjusted year-ago rate of 4.6% and it handily beat the forecasted -1.3% annual change made during the height of pandemic uncertainties.
The generational homeownership dichotomy keeps pushing housing prices higher. Baby boomers own a 54% majority of all the single-family homes in the U.S. and are aging in place an average 50% longer than the previous generation. Meanwhile, the larger cohort of millennials are driving demand by either entering the market or looking to upsize, the report said.
“As older homeowners become more comfortable with listing their homes, they are faced with the reality that if they sell, they may get a smaller home for the same price as what they already have,” Frank Martell, president and CEO of CoreLogic, said in the report. “Rather than decreasing their financial burden and cashing out equity to support their retirement, baby boomers may choose to stay put — which could exacerbate inventory challenges.”
CoreLogic projects that prices will jump another 1.1% into May, with the pace of growth hitting 2.8% by April 2022 as affordability challenges reduce the pool of potential buyers.
Broken down by states, Idaho had the highest growth rate, spiking 27.2% year-over-year in April. Arizona, South Dakota and Montana followed at 20.4%, 19.3% and 19.2%, respectively. At the other end, New York had the lowest rate of growth at 5.3%, with 6.3% in Illinois, 6.4% in Mississippi and 6.6% in North Dakota.
Among the 10 largest metro areas, Phoenix led with a year-over-year spike of 20.7% in price growth. San Diego followed with 16.1% and Denver at 13.8%. However, some markets face risks of price declines. Hartford, Bridgeport and Norwich, Conn., Longview, Texas, and Miami all have a 25% probability of falling home values in the next 12 months.
