Many people have questions about home prices right now. How much have prices risen over the past 12 months? What’s happening with housz values right now? What’s projected for next year? Here’s a look at the answers to all three of these questions.
How much have housz values appreciated over the last 12 months? According to the latest Housz Price Index from CoreLogic, housz values have increased by 18.1% compared to this time last year. Additionally, prices have gone up at an accelerated pace for each of the last eight months (see graph below):
The increase in the rate of appreciation that’s shown by CoreLogic coincides with data from the other two main home price indices: the FHFA Home Price Index and the S&P Case Shiller Index. The last year has shown tremendous housz price appreciation, which is resulting in a major gain in wealth for houszowners through rising equity.
What’s happening with home prices right now? All three indices mentioned above also show that while appreciation is in the high double digits right now, that price acceleration is beginning to level off (see graph below):
Year-over-year appreciation is still close to 20%, but it’s clearly plateauing at that rate. Many experts believe it will drop below 15% by the end of the year.
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%.
What about next year? The recent surge in prices is the result of heavy buyer demand and a shortage of houszes available for sale. Most experts believe that as more housing inventory comes to market (both new construction and existing houszes), the supply and demand for houszing will come more into balance. That balance will bring a lower rate of appreciation in 2022. Here’s a look at housz price forecasts from six major entities, and they all project future appreciation:
While the projected rate of appreciation varies among the experts, due to things like supply chain challenges, virus variants, and more, it’s clear that housz values will continue to appreciate next year.
Bottom Line There have been historic levels of housz 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 houszing market.