Home prices across the U.S. continued to rise in September amid a supply shortage and low mortgage rates, making half of the 50 largest housing markets "overvalued," according to a CoreLogic report released Tuesday.
The CoreLogic Home Price Index was up 7% in September compared with the same period last year. The biggest winner was Las Vegas, with home price index increasing 9.7% year-over-year.
Las Vegas, as well as Denver, Los Angeles, Miami, Washington, D.C. and New York, are among those overvalued metropolitan areas, according to CoreLogic.
| Home Price Change and Market Conditions for Select Metropolitan Areas | ||
| Metro Areas | Y-O-Y Price Change | Market Conditions |
| Las Vegas | 9.70% | Overvalued |
| Denver | 8.40% | Overvalued |
| Los Angeles | 7.10% | Overvalued |
| Boston | 7.00% | At value |
| San Francisco | 6.40% | At value |
| Miami | 5.50% | Overvalued |
| Washington, D.C. | 4.60% | Overvalued |
| New York | 4.50% | Overvalued |
| Chicago | 4.00% | At value |
| Houston | 3.30% | Overvalued |
| Source: CoreLogic | ||
The California-based data provider defines "overvalued" markets as those in which home prices are at least 10% higher than the long-term sustainable level, which are supported by local market fundamentals such as disposable income and employment opportunities.
Out of the 100 largest U.S. markets based on housing stock, 36% are overvalued.
"While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate," Frank Martell, president and CEO of CoreLogic, said in the report.
The continued strong demand for residential real estate is supported by several factors, including a strengthening economy, healthy consumer balance sheets and low mortgage interest rates, Mr. Martell said.
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As far as states go, Washington (12.5%), Utah (10.5%), Nevada (9.5%), Oregon (8.8%) and Colorado (8.2%) reported the largest annual price growth in September.
On a monthly basis, U.S. national home prices rose 0.9% in September compared to August. CoreLogic doesn’t break out luxury data separately.