Many people have questions about home prices right now. How much have prices risen over the past 12 months? What’s happening with home values right now? What’s projected for next year? Here’s a look at the answers to all three of these questions.
1. How much have home values appreciated over the last 12 months?
According to the latest Home Price Index from CoreLogic, home values have increased by 18.1% compared to this time last year. Additionally, prices have gone up at an accelerated pace for the first eight months of the year (see graph below):
The last year has shown tremendous home price appreciation, which is resulting in a major gain in wealth for homeowners through rising equity.
2. What’s happening with home prices right now?
The Home Price Index from CoreLogic, the FHFA Home Price Index and the S&P Case Shiller Index all show that while appreciation is in the high double digits right now, price acceleration is beginning to level off (see graph below):
Keep in mind, that doesn’t mean home values will depreciate. It means the rate of appreciation will slow, yet stay well above the 25-year average of 5.1%.
3. What about prices next year?
The recent surge in prices is the result of heavy buyer demand and a shortage of homes available for sale. Most experts believe that as more housing inventory comes to market (both new construction and existing homes), the supply and demand for housing will come more into balance. That balance will bring a lower rate of appreciation in 2022. Here’s a look at home price forecasts from six major entities, and they all project future appreciation:
- Fannie Mae
- Freddie Mac
- Mortgage Bankers Association
- Home Price Expectation Survey
- Zelman & Associates
- National Association of Realtors
There have been historic levels of home price appreciation over the last year. That pace will slow as we finish 2021 and enter into 2022. Prices will still rise in value, just at a much more moderate pace, which is good news for the housing market.
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