• US home prices are set to fall 6.6% over the next year as the coronavirus pandemic fallout worsens, according to a Tuesday report from CoreLogic.
  • The group’s home price index increased 4.8% in the 12 months through May, supported by strong demand, especially from younger buyers, and low supply, according to the report.
  • “While activity up until now suggests the housing market will eventually bounce back, the forecasted decline in home prices will largely be due to elevated unemployment rates,” CoreLogic wrote in the Tuesday report. “This prediction is exacerbated by the recent spike in COVID-19 cases across the country.”
  • Read more on Business Insider.

US home prices are set to fall over the next year as the coronavirus pandemic continues to slam the economy, according to a report from CoreLogic.

The group predicts that its Home Price Index will slump as much as 6.6% in the 12 months through May 2021, marking the first annual decline since February 2012, as the market grapples with the pandemic recession that began in February.

Thus far, housing has fared well in the coronavirus pandemic. The group’s home price index increased 4.8% in the 12 months through May, supported by strong demand, especially from younger buyers, and low supply, according to the report.

“While activity up until now suggests the housing market will eventually bounce back, the forecasted decline in home prices will largely be due to elevated unemployment rates,” CoreLogic wrote in the Tuesday report. “This prediction is exacerbated by the recent spike in COVID-19 cases across the country.”

New coronavirus cases have hit record highs in some states as the economy reopens, in some cases leading to pausing or rolling back those plans.

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In June, the US economy added a record 4.8 million payrolls, showing that the labor market recovery is underway. Still, the data reflected the earliest weeks of the month, before a new spike in COVID-19 cases threatened reopenings.

"The anticipated impacts of the recession are beginning to appear across the housing market," said CoreLogic. "Despite new contract signings rising year over year in May, home price growth is expected to stall in June and remain that way throughout the summer."

The pandemic recession has had the biggest impact on local housing markets, according to the report. There's a 75% chance of price declines in 125 metro areas in the next year, CoreLogic found.

The hardest hit areas include states like Florida and Arizona that "faced the perfect storm of elevated COVID-19 cases and the subsequent collapse of the spring and summer tourism market," CoreLogic said.