Home Prices Continue to Strengthen; FNC Residential Price Index Up 0.8%
FNC’s latest Residential Price Index™ (RPI) indicates that U.S. residential property values continue to rise in May, widening March’s and April’s gains to capture the strongest seasonal price rebound in five years. Nationwide, May home prices – based on recorded non-distressed sales transactions in the 100 largest metropolitan areas – rose 0.8% from the previous month. Limited inventory amid rising seasonal demand and falling numbers of distressed properties in total home sales continue to be the driving force behind the price recovery. FNC’s 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.[1]
Based on the latest data on non-distressed home sales (existing and new homes) through May, FNC’s national RPI shows that single-family home prices rose in May at a seasonally unadjusted rate of 0.8%.[1] 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. Cumulatively, home prices nationwide rose 2.4% between March and May – the largest three-month gain when compared to the same period in the last five years.
The strong price momentum is seen across all three RPI composites (the National, 30-MSA, and 10-MSA indices), but the two narrower indices show that home prices rose faster in the nation’s largest housing markets, averaging more than 1.0% per month. The 3-month cumulative gains for the 30-MSA and 10-MSA composites are 3.4% and 3.3%, respectively. In the meantime, the indices’ year-over-year trends continue to show decelerations in the pace of price declines when compared to the same month a year ago. May’s negative 1.4% year-over-year marks the slowest pace of price declines since July 2007.
Almost without exception, all markets tracked by the FNC 30-MSA composite index show a month-over-month increase in May, ranging from a flat 0.1% in San Antonio and Charlotte to a strong 3.2% in Cleveland and Miami. (See the included May 2012 vs. April 2012 table.) Strong price rebounds are seen in several highly distressed markets including Atlanta (2.2%), Orlando (1.1%), Phoenix (2.2%), Tampa (2.3%), and Cleveland (3.2%). Meanwhile, these markets’ year-over-year trends have also improved steadily since the beginning of 2012. In January, home prices in Las Vegas and Atlanta were declining year-over-year at 9.5% and 9.3%, respectively, the worst among the country’s largest MSAs. At the end of May, the cities’ year-over-year decline moderated to -4.1% and -4.9%, respectively. The year-to-date table below provides a snapshot of price change from the beginning of the year through May 2012. Except for Charlotte, Denver, and Baltimore, all other major cities show positive price change during 2012. According to the 30-MSA composite index, home prices rose 2.9% year-to-date.
[1] 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.
[1] The hedonic 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.
To interview any of FNC’s mortgage industry experts, contact:
Bill Dabney, manager of public relations
FNC, Inc.
Phone 662/236.8304
bdabney@fncinc.com
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.
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