Prices have been rising this spring
Home prices in April were up a strong 5.4% compared to a year ago, and rose 1.4% from March, CoreLogic reported on Tuesday. They're likely to keep climbing in the short term, despite the weakness in the economy.
“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring,” Nothaft says, in a news release.
Thirty-year mortgage rates last week hit an all-time low average of 3.15% in the long-running survey from mortgage company Freddie Mac, and rates below 3% have started popping up.
But CoreLogic predicts the increases in home prices will start to slow, and before long prices will begin falling. The company predicts they'll be down 1.3% by April of next year, and that 2021 will be the first year of falling home prices in nine years.
Prices for existing homes take off
Other reports also have shown rising home prices this spring. The National Association of Realtors recently said prices for previously owned homes were sizzling nationwide: The median selling price in April was $286,800, 7.4% higher than a year earlier.
The trade group's chief economist, Lawrence Yun, says prices for existing homes have been soaring because houses to buy have been in short supply.
"Record-low mortgage rates are likely to remain in place for the rest of the year, and will be the key factor driving housing demand as state economies steadily reopen," Yun says. "Still, more listings and increased home construction will be needed to tame price growth."
But the Census Bureau, says prices for new homes plummeted in April to a median $309,900, down 5.2% from March and a decrease of 8.6% from a year ago.
The decline shows builders are eager to make deals, says Zillow economist Matthew Speakman — but they may not have to do that for long.
"The pandemic is almost certain to alter consumer preferences going forward, and a new appreciation for cleanliness and safety might sway more buyers to seek newly constructed, never-lived-in homes in the near future," Speakman says.
What other forecasters are saying about home prices
Zillow is forecasting that house prices overall will fall 1.8% in 2020 and will hit bottom in October.
"The continued economic fallout from the spread of COVID-19 has introduced immense uncertainty into the housing market as consumers step back from large purchases and social distancing puts a chill on necessary market services," Zillow says.
But Freddie Mac expects prices for homes will edge up 0.4% this year, and sibling company Fannie Mae also is looking for slightly higher prices.
"We expect that most of the economic damage from the virus will be contained to the first half of the year," says Freddie Mac's chief economist, Sam Khater.
Bottom line: Location, location, location
Whether home prices are or will be going up or down depends to a great extent on where you're looking. As today's extremely low mortgage rates lure consumers out of home confinement and into homebuying, bidding wars are pushing up prices in some markets with shortages of home listings.
More than 40% of offers written by Redfin agents faced competition during the four weeks that ended May 10, the real estate brokerage says.
In the Seattle area, Redfin agent David Hokenson says one client made an offer on a home listed at $360,000 in a desirable suburb.
"Even though the home was outdated and hadn't been renovated since the 1960s, it was one of 24 total offers. That home ended up selling for well above asking price," Hokenson says.