PROVIDENCE – The home price index in Rhode Island increased 14.5% year over year in January, faster than the national rise of 10% in that time, according to CoreLogic Tuesday.
“Record-low mortgage rates were a significant driving force behind last year’s rebound in housing market activity,” said Frank Martell, CoreLogic CEO and president. “However, heavy competition for the few houses on the market drove home prices to historic highs, and mortgage rates are no longer enough to sway the affordability challenges for consumers. While new construction may help balance home prices towards the end of 2021, we may expect to see demand slow in the medium-term.”
The rate of increase in Rhode Island was the second highest in New England:
- Maine: 15.3%
- New Hampshire: 14.2%
- Vermont: 14.2%
- Connecticut: 13.1%
- Massachusetts: 9.6%
Nationally, entry-level homes were said to have seen price growth that outpaced the rest of the market.
“Despite first-time buyers driving high demand, entry-level homes remain in short supply,” said Frank Nothaft, chief economist at CoreLogic. “Homes priced below 75% of the local median price had 14% annual appreciation, negating most of the benefits of record-low mortgage rates. When interest rates rise, the affordability squeeze for first-time buyers will become even more of a challenge.”
CoreLogic said that in a survey it conducted in February, nearly 76% of respondents of U.S. non-homeowners aged 18 or older said they have no plans to purchase a home within the next six months. When asked what was the biggest deterrent, 43% of respondents cited affordability concerns, specifically not having enough money for a down payment or mortgage.
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