Home Prices End Recent Seasonal Rebound with 0.8% Decline in August
Oxford, Miss. (October 20, 2011) – FNC’s latest Residential Price Index, released Thursday, indicates U.S. home prices declined in August despite strong existing home sales during the month. This decline reverses a modest fourth-month long seasonal uptrend. Amid weak economic fundamentals, home prices -- as well as a number of key leading housing indicators including new housing starts and building permits -- signal a likely scenario of continued housing weakness in the months ahead.
Based on the latest data on non-distressed home sales (existing and new homes), FNC’s Residential Price Index™ [1] (RPI) indicates that single-family home prices fell in August to a seasonally unadjusted rate of 0.8%. As a gauge of underlying home value, the RPI excludes sales of foreclosed homes, which are often sold with large price discounts due to poor property conditions. FNC’s RPI is the industry’s first hedonic price index − built on a comprehensive database blending public records with real-time appraisals of property and neighborhood attributes. By modeling observed sales prices as being determined by a number of observable property and neighborhood attributes, one of the key advantages of the FNC RPI is its ability to capture intrinsic home price trends.[2]
Modest price weakening, as indicated by the index’s month-over-month movement, is seen across all three RPI composites (the National, 30-MSA, and 10-MSA indices). On a year-over-year basis, home prices are 4-5% below the levels attained a year ago in August 2010.
Among the metro areas tracked by the FNC 30-MSA composite index, the majority of these markets showed modest price declines in August, including Boston (-1.2%), Miami (-1.6%), Minneapolis (-2.8%), Phoenix (-2.2%), Portland (-3.0%), Los Angeles (-1.1%), San Diego (-1.2%), San Francisco (-1.4%), Tampa (-2.2%), and Washington D.C. (-2.7%). Among the limited few that continued to capture positive seasonal momentum through August, Chicago had one of the largest price increases during the month, up 2.8% from July. More notably, as the auto industry remains one of the few growth spots in the economy, home prices in the Detroit metro area continue to strengthen – making August the fifth month of continually rising home prices.
Year to date, Boston, Dallas, Detroit, Houston, Minneapolis, and San Francisco are among those that showed the best price appreciation after a strong seasonal rebound, up 4.0%, 3.4%, 4.2%, 5.6%, 3.7%, and 4.4% respectively. Having largely missed meaningful seasonal growth, the troubled Las Vegas, Miami, and Orlando markets were down 6.8%, 5.8%, and 5.3%, respectively, year-to-date.
Year over year, Atlanta, Las Vegas, and Orlando continue to lead the nation in annual price depreciation, down 10.8%, 11.8%, and 14.2%, respectively. Detroit remains the bright spot for home price appreciation. Home prices in the city have appreciated more than 7.8% since a year ago. The only two other cities that showed positive annual price appreciation are Boston and Houston, where home prices have appreciated 2.2% and 1.0% in the last 12 months.
[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 in the underlying housing market that excludes foreclosed properties.
[2] 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.
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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