Home prices rose last year by the most in six years, according to housing data company CoreLogic, and are likely to see a significant increase in 2013 as well the company said.
In its January newsletter “The Market Pulse,” CoreLogic reported that across the U.S. home prices rose an average of 7.5 percent in 2012, even as the rest of the economy has made only marginal progress.
The housing market’s improvement certainly surprised most analysts. At the beginning of 2012 even CoreLogic’s experts were doubtful that things would get better.
“Without more robust job creation, incomes will struggle to grow, and its hard to see house prices in the long run rising without income growth,” the company wrote in its newsletter from last year. “The housing market itself is beset by headwinds.”
Yet declining stockpiles of distressed properties and a general decrease in housing inventory led home prices to climb at the fastest pace since the middle of the housing boom.
“Housing was clearly one of the past year’s biggest surprises,” wrote Mark Fleming in the newsletter. “Even without significant gains in income, housing mounted an impressive recovery in 2012.”
And it is continued tight inventory that is prompting CoreLogic to predict that home prices will rise 6 percent in 2013.
“CoreLogic expects continued market improvement…due to high affordability fueling steady demand, a lower level of [distressed] sales and a low inventory of unsold homes,” wrote Sam Khater, another author in the newsletter. “Home prices will play an even more crucial role than usual in the market over the next two to three years. Rising home prices will slowly release the pent-up supply of inventory as under-equitied borrowers are unlocked and opportunistic sellers begin to provide relief to tight inventories.”