HOUSTON – (By Dale King, Realty News Report) — Home prices continued to climb nationwide in June, according to a major real estate report. Texas metropolitan areas followed that upward trend, with Austin showing a remarkable 29.9 percent increase since June 2020.
Texas Triangle Posts Significant Gains
The newly released CoreLogic Home Price Index (HPI) and HPI Forecast for June 2021 reports that home prices in Fort Worth rose 14.6 percent year-over-year. Prices in Dallas increased 13.4 percent, while San Antonio saw a 12.4 percent jump.
Houston recorded a 9.7 percent increase, placing it behind other Texas metros but still reflecting strong appreciation. CoreLogic notes, however, that Houston faces local pressures that could erode some of those gains and potentially lead to a modest decline in home prices over the next 12 months.
June was a particularly active month locally: with a total of 13,090 property sales, Houston recorded its highest monthly sales volume in the city’s real estate history, according to the Houston Association of Realtors.
Despite pandemic-driven economic fluctuations, the housing market remained robust. Nationally, CoreLogic reported an average home price increase of 17.2 percent in June 2021. That marked a jump from the 4 percent year-over-year gain reported in June 2020 and represented the largest annual increase since 1979.
“The increase in home prices was fueled by low mortgage rates, limited for-sale inventory and a rebounding economy,” CoreLogic said. The firm added that expected growth in available listings and easing demand as prices rise beyond the reach of some buyers could slow price appreciation over the next 12 months.
Affordability Remains a Central Concern
Affordability constraints persist in many metro areas as prices climb. For example, CoreLogic notes that in June the cost of buying a home in San Diego rose 22.4 percent year-over-year and is forecast to grow an additional 11.5 percent over the next year.
Conversely, the HPI Forecast highlights regional differences in price trends. In markets such as Houston—still recovering from the collapse in oil prices and the impact of past hurricane seasons—home prices are projected to decline about 0.9 percent by June 2022.
On a national basis, CoreLogic projects home price growth to moderate, estimating a 3.2 percent increase by June 2022. Ongoing affordability pressures may deter some buyers, and a rise in new for-sale listings could contribute to slower price growth.
Still, supply-and-demand imbalances and rising construction costs persist, while low mortgage rates, increased household savings and improving labor market conditions continue to support homeownership for many prospective buyers.
“Home prices have been rising in the mid-single digits for several years. The recent move to double-digit gains reflects the convergence of exceptional demand and persistent low supply,” said Frank Martell, president and CEO of CoreLogic. “With substantial cash reserves on the sidelines and very low mortgage rates, prices are being pushed higher and affordability will be a growing concern for the foreseeable future.”
The report identifies several metropolitan areas at risk of price pressure. “The CoreLogic Market Risk Indicator (MRI) shows Springfield, Mass. as having the highest risk (25–50%) of a home price decline over the next 12 months. Worcester, Mass.; Chico, Calif.; Oxnard–Thousand Oaks–Ventura, Calif.; and Norwich–New London, Conn. are also at risk, though at lower probabilities (under 25%).”
Top Gainer: Twin Falls, Idaho, Up 42 Percent
Key takeaways from the June report include:
- Home prices rose sharply in Western markets, with Twin Falls, Idaho posting the highest year-over-year increase at 42 percent. Bend, Oregon, followed with a 35.4 percent increase. These gains are likely influenced in part by migration from higher-cost states such as California.
- At the state level, Idaho and Arizona led price growth, with 34.2 percent and 26.1 percent increases respectively. Montana also showed substantial appreciation at 24.3 percent as buyers sought more affordable areas with lower density and strong outdoor amenities.
- In June, detached single-family homes appreciated 19.1 percent year-over-year—the highest level recorded by the index—nearly double the 10.7 percent increase for attached properties, reflecting continued buyer demand for more living space and lower-density communities.
Nothaft: Largest Price Spike on Record
“The pandemic drove increased demand for lower-density neighborhoods and more living space—both inside and outside the home,” said Frank Nothaft, chief economist at CoreLogic. “Single-family detached homes have met that need, producing the highest annual growth in June since the CoreLogic Home Price Index began in 1976.”
Aug 9, 2021 Realty News Report Copyright 2021
Photo: Courtesy Arch-Con Corp.
For more about Texas real estate, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available in ebook and print editions.
File: Austin Home Prices Up 30 Percent