U.S. home prices will fall about 6.6 per cent. during the 12 months through May 2021, the first annual annual decline since 2012, as the economic impact of the COVID-19 pandemic deepens, according to a report Tuesday by CoreLogic Inc.

Home prices and purchases have been buoyed so far this year by pent-up demand, low interest rates and a tight housing supply, but sales likely will weaken as virus cases increase and high unemployment persists. The CoreLogic Home Price Index climbed 4.8 per cent. in the 12 months through May.

“By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession,” CoreLogic Chief Economist Frank Nothaft said.

U.S. virus cases increased by 2 per cent Monday to 2.9 million, according to data collected by Johns Hopkins University and Bloomberg News. Payrolls climbed a better-than-forecast 4.8 million jobs in June, based on data before the recent surge in virus cases.

There’s at least a 75 per cent chance of price declines in 125 metro areas by next May, led by getaway destinations in states such as Arizona and Florida that “faced the perfect storm of elevated COVID-19 cases and the subsequent collapse of the spring and summer tourism market,” according to the report.

The last annual decline was in January 2012 at -0.3 per cent.

Other predictions in the report include:

  • Las Vegas prices will plunge 20.1 per cent. as the suffering local tourism economy combines with prices that CoreLogic deemed overvalued before the crisis to trigger the extreme drop.
  • Other major metro areas’ anticipated price changes are Boston -11.7 per cent., Chicago -5.8 per cent., Denver -9 per cent., Houston -7.4 per cent., Los Angeles -6.3 per cent., Miami -6.4 per cent., San Diego -1.3 per cent., San Francisco -3.5 per cent., Washington -5.4 per cent..
  • CoreLogic didn’t report a forecast for the New York metro area, where prices rose 2.3 per cent. in the 12 months through May.