Home prices continue to spiral higher, defying economic gravity and analyst predictions, and raising questions about how sustainable recent trends can be.
Prices were up 6.8% compared to a year ago in June, according to CoreLogic’s Home Price Index, released Tuesday. That’s the fastest annual rate since May 2014, and it marks the 14th-straight month in which prices have either stayed steady or increased. In other words, home price growth isn’t just not slowing down, it’s speeding up.
As CoreLogic put it, the "affordability challenges thwart younger buyers.” At some point that will start to thwart healthy market progress, too. The data firm said that in June, home sales in the pricey San Francisco Bay area and Southern California were down 9% and 12%, respectively, compared to a year ago.
Prices are rising at more than double the rate of wage growth even as mortgage rates are slowly and steadily on the rise, and some tax incentives to ownership have been curtailed.
The group forecasts that national home prices will rise 5.1% in the coming 12 months, but it's worth repeating that housing economists have been expecting prices to slow down for years. In June 2017 , for example, CoreLogic said its year-ahead forecast was for 5.2% price growth.
It’s worth noting that some other measurements of pricing have pointed to some deceleration, however. The S&P/Case-Shiller 20-city index rose 6.5% for the year ending in May, down from a 6.7% annual increase for the year ending in April. It’s possible CoreLogic’s data may start to show similar trends, and that its forecast, next year, may turn out to be accurate.