Thanks to rising family incomes, low mortgage rates and older millennials, home prices in the U.S. are projected to rise through July 2020.
That’s according to a report released Wednesday by the real-estate data firm CoreLogic. The property information provider forecasts annual price growth of 5.4% by July 2020 despite major housing markets experiencing declines across the U.S. in much of 2019.
“With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up,” said Frank Nothaft, chief economist at CoreLogic. “If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”
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The optimistic housing market outlook comes on the heels of an August index report by the S&P CoreLogic Case-Shiller which showed home prices rising at the slowest pace since 2012. The composite home price index also said that June prices fell in New York and Miami as Seattle experienced year over year drops, according to MarketWatch.
“Although the rise in home prices has slowed over the past several months, we see a reacceleration over the next year to just over 5% on an annualized basis,” said Frank Martell, president and CEO of CoreLogic. “Lower rates are certainly making it more affordable to buy homes and millennial buyers are entering the market with increasing force.”
Millennials have been driving home sales the past few years, and the young adults are doing so thoughtfully.
About 76% of young adult recent homebuyers spent less than 30% of their monthly income on housing costs in 2017, the latest data available shows. That number was up from 69% in 2000 and 65% in 2009, according to Census data.
And Older millennials specifically are “starting to express a desire to buy in a very tight housing market,” according to CoreLogic. At the end of July, the inventory of homes for sale was down nearly 2% over a year ago, according to the National Association of Realtors.
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