Home Prices Will Keep Rising, but Level-Off Soon

Home prices continue to increase by double digit percentages on a year-over-year basis CoreLogic said today. The company’s Home Price Index (HPI) for February, an index that includes distressed sales, was up 12.2 percent compared to February 2013. Thus February becomes the 24^th consecutive month in which there have been annual price increases. Home prices nationwide, including distressed sales, increased by 0.8 percent in February compared to the previous month.

Including distressed sales, the five states with the highest home price appreciation were California (+19.8 percent), Nevada (+18.5 percent), Georgia (+14.2 percent), Oregon (+13.8 percent) and Michigan (+13.5 percent). There were no states with negative annual appreciation.

On its index which excludes distressed sales, national home prices were up 10.7 percent compared to February 2013 and 0.9 percent from January. All 50 states and the District of Columbia showed annual increases with the greatest appreciation in California (+15.9 percent), Nevada (+14.6 percent), Florida (+13.1 percent), Washington (+11.5 percent and Hawaii (+11.5 percent). An additional nine states had double digit annual appreciation and Colorado, Nebraska, North Dakota, Texas and the District of Columbia all reached new home price highs. Additionally, 22 states were at or within 10 percent of their price peaks.

From the price peak in April 2006 to February the change in the national HPI was -16.9 percent including distressed sales and 12.1 percent excluding them. The five states with the largest remaining peak-to-current declines, including distressed transactions, were Nevada (-39.9 percent), Florida (-36.4 percent), Rhode Island (-30.9 percent), Arizona (-30.5 percent) and West Virginia (-26.6 percent).

Ninety-six of the top 100 Core Based Statistical Areas (CBSAs) measured by population showed year-over-year increases in February 2014. The four exceptions were Little Rock-North Little Rock-Conway, Ark., Milwaukee-Waukesha-West Allis, Wis., Rochester, N.Y. and Virginia Beach-Norfolk-Newport News, Va.-N.C.

“February marks two straight years of year-over-year gains in national prices across the United States,” said Anand Nallathambi, president and CEO of CoreLogic. “The consistent upward movement in home prices should ultimately prove to be an important stimulant for higher levels of sustained market activity and growth in the housing economy.”

CoreLogic said today’s report introduces a new forecast metric that provides advanced indication of home price trends. The current forecast is that home prices are projected to increase 0.5 percent month over month from February 2014 to March 2014 and that home prices, including distressed sales, are expected to rise 10.5 percent year over year from March 2013 to March 2014. Excluding distressed sales, home prices are poised to rise 0.4 percent month over month from February 2014 to March 2014 and 9.3 percent year over year from March 2013 to March 2014.

“As the spring home-buying season kicks off, house price appreciation continues to be strong,” said Dr. Mark Fleming, chief economist for CoreLogic. “Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply.”

SOURCE: www.mortgagenewsdaily.com