March FNC Residential Price Index Up 0.5%
Year-to-Year Declines at Five-Year Lows
FNC’s latest Residential Price Index™ (RPI), released Wednesday, indicates that U.S. residential property values are up for the first time since July 2011, providing more evidence that the housing market is rebounding as the spring homebuying season is underway. Despite modest declines in March home sales, home prices – based on recorded sales transactions in the nation’s 100 largest metropolitan areas – enjoyed a small increase from February. Declining foreclosure sales as a percentage of total home sales have likely contributed to the price stabilization. More robust price increases are expected with the increase in spring home sales while the conditions of record low mortgage rates and favorable price affordability continue to attract potential homebuyers.
Based on the latest data on non-distressed home sales (existing and new homes) through March, FNC’s national RPI shows that single-family home prices rose in March to a seasonally unadjusted rate of 0.5%. (See the included Month-to-Month Index Trends table.) As a gauge of underlying home value, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts reflecting poor property conditions. The RPI is the industry’s first hedonic price index − built on a comprehensive database that blends public records with real-time appraisals of property characteristics and neighborhood attributes.
All three RPI composites (the National, 30-MSA, and 10-MSA indices) indicate a positive month-to-month change in March, with the two narrower indices capturing nearly one percentage point increase from February. The indices’ year-to-year trends continue to improve, dropping below 3.0% − the slowest since the housing crash.
Twenty-two of the markets tracked by the FNC 30-MSA composite index show a month-to-month increase in March that averaged about 1.1%. Among them, the Houston market experienced the largest price increase, up 3.0% from the previous month, followed by Nashville 2.1%, Atlanta 2.0%, and New York at 1.7%. Two of the largest cities in Florida – Miami and Tampa – are showing strong signs of a housing recovery; home prices in each city have been rising for more than four consecutive months, driven in part by a declining share of foreclosure sales.
In contrast, home prices in Washington, D.C., continue to deteriorate at a fairly rapid pace, down nearly 6.0% in the last four months or 10.0% year-to-year. The price deterioration occurred even though the city’s foreclosure sales make up a relatively small percentage of total home sales. As of March, D.C. ranks worst among the nation’s major housing markets in the year-to-year price depreciation, followed by Atlanta 8.1%, Las Vegas 7.7%, and St. Louis at 7.5%. Meanwhile, markets including Nashville, Detroit, Boston, and Denver are experiencing modest year-to-year price appreciations at 3.4%, 3.1%, 2.9%, and 1.8%, respectively.
Peak to date, 16 of the component markets in the FNC 30-MSA composite index continue to show more than 30% declines in property values; in eight, homeowners have lost almost 50% or more of the peak market value. Leading the declines are Las Vegas (62.5%), Phoenix (58.4%), Orlando (58.3%), Riverside (58.1%), Sacramento (56.9%), and Miami (54.1%). The peak-to-date price change is positive for two of the largest Texas cities, Houston and San Antonio—a stark contrast to the rest of markets.
 The FNC National Residential Price Index is a volume-weighted aggregate price index consisting of 100 major metropolitan areas across different regions of the U.S. All FNC Residential Price Indices are constructed to capture unsmoothed home price trends.
 The procedures used to create the index are described in “Hedonic versus repeat-sales housing price indexes for measuring the recent boom-bust cycle,” by Dorsey, R.E., Hu, H., Mayer, W.J., and Wang, H.C., Journal of Housing Economics 19 (2), 75–93.
About FNC, Inc.
Since 1999, FNC has pioneered real estate information technology, automated appraisal ordering, tracking, documentation and review for lender and servicer compliance with government regulations. FNC’s platforms are in production at seven of the 10 largest U.S. mortgage lenders and provide value to large and small lenders with reduced costs and more efficient loan processing. With collateral management platforms, data and analytics, FNC provides advanced insight into the property backing a loan from origination to capital markets. Visit FNC online at www.fncinc.com.