(Bloomberg) -- U.S. home prices increased 18% in July compared to a year earlier, according to a CoreLogic Inc. report released Tuesday.
The jump is the largest 12-month gain in the index since the series began 45 years ago. On a month-over-month basis, home prices increased by 1.8% in July from June.
“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,” said Frank Martell, president and CEO of CoreLogic, a global property-information firm.
The rush of home buyers -- amid extremely low mortgage rates -- has caused a lack of supply, which is unlikely to be resolved over the next five to 10 years “without more aggressive incentives for builders to add new units,” he said in a statement.
The rate of growth is expected to slow considerably, according the CoreLogic projections.
By July 2022, annual home prices are projected to decrease to a 2.7% pace as ongoing affordability challenges deter some potential buyers.
“This price gain has far exceeded income growth and eroded affordability,” said Frank Nothaft, chief economist at CoreLogic. “In the coming months this will temper demand and lead to a slowing in price growth.”
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