Despite recent hikes in interest rates, the cost of mortgage financing continues to be near historical lows, according to the report. An improving economy and housing market fundamentals continue to drive prices up. Foreclosures have dropped rapidly, with distressed sales contributing only 13.9% to total home sales, down from 16.2% in April and 19.6% a year ago. The median sales-to-list price ratio in May was 96.1., up from 95.4 in April and 93.2 a year ago.
Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that May home prices rose from the previous month at a seasonally unadjusted rate of 0.5%. The two narrower indices (30-MSA and 10-MSA composites) recoded a 0.4% increase. On a year-over-year basis, home prices were up a modest 4.0% from a year ago.
FNC’s RPI is the mortgage industry’s first hedonic price index built on a comprehensive database that blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes. As a gauge of underlying home values, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts, reflecting poor property conditions.
The majority of the markets tracked by the FNC 30-MSA composite index show rising prices in May, led by Nashville, Phoenix, and Las Vegas at nearly 2.0% each. In Phoenix, home prices continue to show no signs of moderation, rising 2.0% for 16 consecutive months since February 2012. Las Vegas enjoys a similar 16-month rising streak but at a more moderate pace of 1.2% per month. Foreclosure sales in both cities have fallen below the national average. Home prices were flat to slightly declining in San Antonio, Houston, Chicago, Washington, D.C., and Detroit. Although trending lower, foreclosure sales in Detroit, Chicago, Cleveland, and St. Louis continue to account for a significant portion of existing home sales at 39.5%, 26.8%, 26.3%, and 21.5%, respectively.