FNC Index: Home Prices Up 0.6% in February; Key Markets Show Strongest Unseasonable Gains since February 2014

 U.S. home prices have recently enjoyed a modest to strong rebound, rising by an average of 0.6% nationwide, according to FNC’s Residential Price Index™ (RPI), released on Thursday, April 16, 2015. This increase in home prices marks a sharp reversal in the downward spiral of price trends over the past five to six months.

In terms of seasonal performance, February realized the strongest unseasonable gains since February 2014 in many of the nation’s key housing markets. Home sales have likely increased due to the rising availability of high-leverage loans and to continued record low interest rates.

Completed foreclosures in February comprise about 15.8% of total existing home sales, which is a significant drop from 17.1% a year ago. In the for-sale market, the asking price discount and time-on-market are improving after rising to 24-month highs in January. In February, the median discount is 4.9% while the time-on-market is 129 days. Preliminary March estimates show continued improvement in the average pace of home sales nationwide.

FNC’s RPI is the mortgage industry’s first hedonic price index built on a comprehensive database that blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes. As a gauge of underlying home values, the RPI excludes final sales of REO and foreclosed homes, which are frequently sold with large price discounts, likely reflecting poor property conditions.

The table below shows seasonally unadjusted month-over-month (MOM) and year-over-year (YOY) changes in three composite indices. The national index is based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas.  The 10-MSA composite recorded the largest MOM increase at 1.1%, followed by the 30-MSA composite at 0.9% and the national index at 0.6%. February’s gains hold back YOY growth from further slipping; average home price appreciation remains above 4%.

The chart below tabulates the latest MOM and YOY price trends for each MSA in the FNC 30-MSA composite index. Home prices are up in 21 MSAs, significantly outnumbering declining markets. Three California cities -- Sacramento, San Francisco, and Riverside – lead with the largest MOM price gains at 3.4%, 3.2%, and 2.4%, respectively. Home prices in Minneapolis, Portland, and Dallas also show an increase at an unseasonably strong pace.
Among the down-markets, three Midwestern cities – St. Louis, Detroit, and Cleveland – recorded the largest MOM declines at 1.7%, 1.2%, and 0.8%, respectively. Home prices dropped unexpectedly in Seattle (0.6%) after rising for 24 consecutive months and, in San Antonio, February’s 0.3% decline marks the seventh consecutive month the city has experienced a price decline.

As of February, the fastest YOY growth markets are Las Vegas (12.8%), Riverside (12.2%), Miami (11.2%), and Orlando (10.6%), followed by a number of other cities that also continue to enjoy robust appreciation: Los Angeles (9.0%), Dallas (8.8%), Portland (8.7%), and Charlotte (8.0%).

Despite a small MOM increase in February (0.4%), New York showed a 0.6% YOY decline. Between August and January, home prices in the city declined at an average rate of 0.8% per month. Detroit, Nashville, and Washington D.C. continue to show a flat to negative YOY change in recent months. For St. Louis, February marks the 18th consecutive month of YOY declines.

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