Although home prices have appreciated steadily, price drops may be in the near future. The May Home Price Index and HPI Forecast conducted by CoreLogic predicts a year-over-year home price decrease of 6.6% by next year, according to Barron’s. If the data’s forecast of declining prices occurs, it would be the most dramatic decrease since September 2009. CoreLogic anticipates home buying to slow down by the end of summer. The markets most at risk include cities in Arizona, Florida, and Alabama.
The forecast comes on the heels of a host of relatively positive housing data that found demand picking up after its initial coronavirus-induced decline in early spring. Home prices in May 2020 grew 4.8% from the same month in 2019 and 0.7% from April 2019, according to the CoreLogic report—greater than the 0.3% month-over-month increase CoreLogic predicted in April.
While robust demand and a tight supply of homes for sale have kept prices up through the crisis, “the anticipated impacts of the recession are beginning to appear across the housing market,” CoreLogic said in a press release. The company’s May forecast predicts a month-over-month price decrease of 0.1% in June and a year-over-year decline of 6.6% by May 2021.