Home prices surged by 18% annually in July, setting a new record for home price growth, according to the latest Home Price Index (HPI) from CoreLogic.
Mortgage rates remain at record lows, which has spurred housing demand and kept housing inventory low, CoreLogic's report showed. This has pushed home prices to new heights. Home prices increased 1.8% month-over-month from June to July, according to the HPI.
"Home price appreciation continues to escalate as millennials entering their prime home-buying years, renters looking to escape skyrocketing rents and deep-pocketed investors drive demand," CoreLogic President and CEO Frank Martell said. "On the supply side, it is also the result of chronic underbuilding, especially of affordable stock. This lack of supply is unlikely to be resolved over the next five to 10 years without more aggressive incentives for builders to add new units."
Rising home prices give homeowners more options, such as drawing a cash-out refinance on their home. This equity can be used to pay down high-interest debt or for home renovations. Visit Credible to see your options and find your personal interest rate for a mortgage refinance.
Homeowner equity soars by a record $1 trillion
Homeowners with mortgages gained a record $1 trillion in tappable equity in the second quarter of 2021 alone due to the unprecedented price gains, according to the latest Mortgage Monitor report from Black Knight.
This increase in equity has improved the positions of those in COVID-19-related forbearance, Black Knight explained. Currently, about 98% of those in forbearance have at least 10% equity in their homes.
"Such strong equity positions should help limit the volume of distressed inflow into the real estate market as well as provide strong incentive for homeowners to return to making mortgage payments – even if needing to be reduced through modification," Ben Graboske, Black Knight president of data and analytics, said.
As homeowner equity and home prices rise, homeowners can take advantage of a mortgage cash-out refinance. Visit Credible to compare rates from multiple lenders at once and choose the one that is the best fit for you.
Home prices surge, but affordability is up
Despite these high prices, homebuyers should not despair. A combination of low mortgage rates, high home prices and higher income levels are making homes much more affordable compared to the height of the housing boom in 2006, according to First American Financial Corp.’s Real House Price Index.
"Since the housing boom peak in unadjusted prices in 2006, the average 30-year, fixed mortgage rate has fallen by approximately 3.3 percentage points, from 6.32% to 2.98%," First American Chief Economist Mark Fleming said. "Over the same period, nominal household income has increased 55%.
"The dramatically lower mortgage rates and higher income levels mean homebuyers in June had 129% more house-buying power than in 2006," Fleming said. "House-buying power matters because people buy homes based on how much it costs each month to make a mortgage payment, not the price of the home."
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