With inventories of homes available for sale dwindling across the nation, it is no surprise that home prices have hit new price highs. According to a report from cnbc.com, ten states including the District of Columbia have hit new prices, averaging at 6.3 percent in May compared to last year's figures.
The report quoted Corelogic's Chief Economist Frank Nothaft, who said, "Mortgage rates on 30-year fixed-rate loans remained below 4 percent through May, helping to fuel home purchase activity." He added, "Our homes-for-sale listing data shows that markets with high demand and limited supply, such as San Francisco, are recording double-digit appreciation rates over the past year."
The ten states identified by Corelogic include Alaska, Colorado, Iowa, Nebraska, New York, North Carolina, Oklahoma, Tennessee, Texas and Vermont. The new pricing records may move many homeowners to sell off their properties.
Corelogic's analysis is projecting that by May 2016, home prices would eventually slow down to an annual growth rate of 5.1 percent. According to a report from marketwatch.com, new sales would ease the pressure exerted on prices through the expansion of available homes in the market.
The higher prices have both pros and cons. With the increase in prices, the homeowner increases their equity and if they sell the property, they would be able to prop up any issues financially. The downside is, if prices rise too quickly, many would be unable to afford their own home. This would hit hard on those first time buyers or younger households.
The price growth is uneven in some areas. While many retained their levels, others have slipped further. These states with declining prices include Nevada, whose May home prices have been 32.9 percent below peak levels. Another state in the doldrums is the Florida property market, which is below 28.8 percent its price peak.