April 6, 2012 (Jeff Alan)
A slight decline in national home prices in March indicates that the housing market may finally be near the bottom as three out of the four regions posted modest growth during the latest quarter according to Clear Capital’s Home Data Index (HDI). The real estate data provider expects home prices to be 1.2 percent higher by the end of 2012.
National home values fell 0.2 percent in the latest rolling quarter ending in March with the bulk of the decline once again originating out of the Midwest region where prices declined 2.4 percent in the latest quarter.
Home values in the other three regions posted gains with the South recording the largest increase of 0.6 percent followed by the Northeast at 0.3 percent and the West at 0.1 percent.
Prices at the end of March were 1.4 percent lower than they were a year earlier, a step down from the 1.9 percent year-over-year price decline posted at the end of February. It was the 19th consecutive month that annual home prices have declined but it was also the smallest year-over-year price difference in 11 months.
Three of the four regions posted year-over-year declines with the Midwest also suffering the largest decline (-3.8%), followed by the West (-2.5%), and the South (-0.4%), with the Northeast (+0.6%) being the only region to post an increase.
Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital stated, “With the exception of the Midwest, positive growth in rolling quarter-over-quarter prices is an encouraging sign that markets are rebounding from the winter slow down earlier than usual. Even with the relatively modest declines seen over the last few months, markets have continued to show signs of bottoming out. The projections we made at the beginning of the year are playing out and we expect to see the nation gain just over 1% through the year’s end.”
The top performing markets over the latest quarter were the Phoenix – Mesa – Scottsdale, AZ area (+7.3%), Dayton, OH (+6.3%), Pittsburgh, PA (+6.1%), Washington D.C. (+5.0%) and Richmond, VA (+4.1%).
The worst performing markets over the latest quarter were the Birmingham – Hoover, AL area (-14.0%), the Milwaukee – Waukesha – West Allis, WI area (-9.5%), the Detroit – Warren – Livonia, MI area (-6.9%), Memphis, TN (-5.1%) and the Seattle – Tacoma – Bellevue, WA area (-4.0%).
REO sales as a percentage of total home sales increased from 25.8 percent at the end of February to 27.0 percent at the end of March, increasing in all four regions. Home values in the South, the Northeast and the in the West bucked past trends by increasing instead of declining when faced with rising REO activity. Not so with the Midwest. Not only did the Midwest suffer the only price decline during the last quarter, it also had the largest increase in REO activity, 3.8 percentage points.
“We are continuing to see, overall short term home value strength against the rising REO saturation. This is an indication of market stability, and bodes well for the continued growth we’re expecting over the rest of the year,” added Villacorta.
Tags: Clear Capital, housing prices, price declines, REO, saturation rate, consumer demand, metropolitan areas