Millennials are jumping into homeownership in larger numbers, and they’re firing up home prices as they hunt within limited supplies, real estate data firm CoreLogic reports.
Overall, home price gains had been shrinking over the last year, but increases reversed course and annual gains started trending higher this summer. Home prices increased 3.6% in July compared to a year ago. That is higher than the 3.4% increase in June. CoreLogic economists are now predicting home prices to gain more over the next few months, reaching a 5.4% annual gain by July 2020.
“Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income,” says Frank Nothaft, chief economist at CoreLogic. “With the for-sale inventory remaining low in many markets, the pickup in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”
More than a quarter of millennials—the nation’s largest generation—says they’re interested in buying a home in the next 12 months, according to a joint survey from CoreLogic and RTi Research this year. But limited supplies of homes for sale are undercutting their house hunt. At the end of July, the inventory of homes for sale was nearly 2% lower compared to a year ago, according to the National Association of REALTORS®. In July, there was a 4.2-month supply of homes for sale; a six-month supply is considered a balanced market.
“A growing number of millennials are expressing an interest in buying homes, reinforcing the theory that this cohort is continuing to engage within the housing market,” says Frank Martell, president and CEO of CoreLogic. “But with so few homes available for sale, the imbalance has created an affordability crisis that is getting worse every day. Demand exceeds supply and we’re unsure of when the two will balance out.”
Source: “Older Millennials Are Driving Home Prices Higher Again,” CNBC (Sept. 3, 2019) and CoreLogic