CoreLogic forecasts that prices of single-family houses, including distressed sales, would begin dropping on a month-to-month basis with the June reading – it just released its May reading, which was up 4.8% year-over-year – and that prices, as tracked by the national Home Price Index (HPI), would be down 6.6% year-over-year by May 2021.
“2021 will mark the first year home prices are expected to decline in more than nine years,” CoreLogic said. The last year-over-year decline in the HPI was booked in January 2012.
“Strong home purchase demand in the first quarter of 2020, coupled with tightening supply, has helped prop up home prices through the coronavirus (COVID-19) crisis. However, the anticipated impacts of the recession are beginning to appear across the housing market,” the report said.
The last time unemployment surged in the US (red box) was associated with a rapid decline in home prices. Based on the current jump in unemployment (pink box) due to the Covid-19-related economic shutdown, CoreLogic is predicting a -6.6% YoY decline by May.