National home prices increased 7.3% year over year in October 2020, according to the latest CoreLogic Home Price Index (HPI) Report. The October 2020 HPI gain was up from the October 2019 gain of 3.5% and was the highest year-over-year gain since April 2014. The pandemic has shifted home buyer interest toward detached rather than attached homes as detached homes have more living area and tend to be located in less densely populated neighborhoods. Prices of single-family detached homes posted an annual increase of 7.9% in October, compared with a 4.5% annual price rise in attached homes.
September home prices increased 6.7% on average.
The economic downturn that started in March 2020 is predicted to slow the HPI increase to 1.9% by October 2021, which would be the lowest increase in annual home prices since March 2012.
Figure 1: Home Prices Typically Fall During Recessions, But Prices Up in 2020
Figure 1 shows movements in the inflation-adjusted HPI for the six most recent recessions starting from the first month and through the end of each recession. Numbers below 100 indicate falling home prices, which has been a feature of four of the six recessions. However, at seven months in, the 2020 recession is following the path of the 2001 recession, which is the only other one of the six with increasing home prices. The worst of the six recessions was the Great Recession that started in 2008, which was characterized by excess supply of homes for sale, which is not the case in today’s tight-supply housing market.
CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price. Home price growth has accelerated for all four price tiers this year to the highest rates since 2014. The lowest price tier increased 10.9% year over year in October 2020, compared with 9% for the low- to middle-price tier, 8.5% for the middle- to moderate-price tier, and 7.4% for the high-price tier.