As increasing mortgage interest rates discourage potential home buyers, price appreciation appears to be slowing down, with August seeing the lowest home price gains in two years — a trend that real estate analyst firm CoreLogic predicts will continue into 2019.
The Home Price Insights report for August shows an overall price growth of 0.1% over July, and a 5.5% increase over the past year. Projections for next month anticipate a -0.4% drop from August to September. Looking down the road to August 2019, CoreLogic economists predict a 4.7% growth.
“The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home,” Frank Nothaft, chief economist at CoreLogic, said in a statement about the findings. “The slackening in demand is reflected in the slowing of national appreciation.”
While overall appreciation has slowed down, home prices continue to rise, with states like Nevada, Washington, and Idaho experiencing the greatest year-over-year growth — and all three states logging values up to 9% greater than last year’s totals. Thanks to rising home values in Las Vegas, Nevada experienced the most growth at 13%, while North Dakota was the only state not to experience home value gains in August.
Home sales are also slowing in some areas as homeowners wait to put their homes on the market, the data shows. For homeowners who intend to buy a home in the next 10 years, 66% said they would have to sell their current property to finance that next purchase.
“In some markets, homebuyers and sellers are remaining cautious and taking a pause as price appreciation continues to rise,” CoreLogic president and CEO Frank Martell said in a statement. “By waiting to sell, homeowners believe they will get the greatest return on their investment; the more money they have for a down payment, the easier the purchase payments will be for their next home.”
Written by Maggie Callahan