According to the latest CoreLogic Home Price Index (HPI®) Report, released on Tuesday (1-4-22), U.S. national home prices increased 18.1% year-over-year in November 2021. The November 2021 HPI gain was up from the November 2020 gain of 8.1% and was the highest 12-month growth in the U.S. index since the series began in 1976. The increase in home prices was fueled by low mortgage rates, low for-sale supply, and an influx in homebuying activity from investors. Projected increases in for-sale supply and moderation in demand as prices grow out of reach for some buyers could slow home price gains over the next 12 months.
According to the HPI, the surge in home price appreciation was felt across the country, with most states showing higher appreciation in November 2021 than in November 2020. Florida had the biggest acceleration in home price growth from November 2020 (+7.7%) to November 2021 (+25.8%). Washington, D.C. saw a slowdown in appreciation with prices increasing 4.2% in November 2021 compared with 6.2% in November 2020.
The report concludes that the U.S. housing market had a record-breaking year in 2021, with annual price appreciation reaching the highest level recorded in the 45-year history of the index. For current homeowners, home price increases led to record levels of home equity, but for potential buyers, appreciation posed affordability challenges.
Though home price growth remains at historic highs, it is projected to slow over the next year. However, economic growth and inflation will most likely lead to increases in mortgage rates, which will further erode affordability.
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