The states and regions where home prices rose the most

The combination of low mortgage rates and the desire among many buyers to change their lifestyle or increase their living space has led to rising demand for homes over the past year.

At the same time, the limited number of homes for sale has added to the frenzy among purchasers who fear missing out on the opportunity to buy a property before mortgage rates increase. Add to that the large number of millennials reaching the age when they marry and have children, a time period that often coincides with buying a first home, and you have a perfect storm for the housing market.

Those factors contributed to the largest annual gain in home prices in August in the 45-year history of the CoreLogic Home Price Index. Between August 2020 and August 2021, home prices, including distressed sales, increased by 18.1 percent. Distressed sales refer to short sales and foreclosures. While that's uplifting news for homeowners and home sellers, that increase is disheartening for first-time home buyers.

CoreLogic's Home Price Insights report provides both a history and a forecast for prices based on their economic research. In the forecast, there's better news for buyers: CoreLogic predicts that home prices will rise just 2.2 percent between August 2021 and August 2022.

A prime reason that the record-breaking home price increases are likely to slow next year is that the lack of affordable homes are preventing many buyers from entering the housing market. Home prices have risen most dramatically in states with more affordable housing that are attracting buyers who can work in any location or who are moving to the states and finding employment there.

The five states with the sharpest home price increases from August 2020 to August 2021 include:

1. Idaho - prices up 32.2 percent

2. Arizona -...