Home prices surged another 21% in April; experts say it’s not a bubble

Abstract

Fear of missing out fueled another record increase in home prices in April, but the seemingly relentless pace of growth is approaching an end, some economists said. Housing costs jumped 20.9% year-over-year in April, the 123rd straight month of gains, and rose 2.6% on a monthly basis, according to the CoreLogic Home Price Index. Annual price growth in March came in at a similar level, while the monthly increase slowed from 3.3%."The record growth in home prices is a result of a scarcity of for-sale inventory coupled with eager buyers who want to purchase before mortgage rates go higher," said Patrick Dodd, president and CEO at CoreLogic, in a press release. NerdWallet found available inventory plunged by 62% since pandemic onset, with some cities, including Raleigh, North Carolina, and Nashville, Tennessee, seeing housing supply decline by over 70%. Since April 2020, home prices also rose by approximately 26% adjusted for inflation, NerdWallet determined. The surge drove asking prices for homes across the country's most populated metropolitan areas in the first quarter 6 times higher than a typical first-time buyer's income, an increase from 5.5 times in the previous quarter. While CoreLogic's analysis of public records and servicing and securities real-estate databases found 70% of homes selling above asking price in early spring, separate research from Redfin revealed that, in the first few weeks of May, close to 20% of sellers cut their initial asking price, the highest rate since late 2019. Sixty percent of a panel of over 100 economists and housing experts participating in the Zillow Home Price Expectations survey indicated that the housing situation did not constitute a bubble in their opinion, but close to one-third, or 32% disagreed.