Home prices are on the rise; the most recent FNC Residential Price Index™ (RPI) shows U.S home prices made a climb of nearly 7 percent from March to April, the largest price acceleration since June 2012.
What is the driving force behind this acceleration? One possible cause may be the rising seasonal demand as we make way into spring and summer. In addition, improved credit availability, low interest rates, and low home prices continue to add momentum to the housing recovery.
Signs of rising mortgage rates – which have been hovering at historical lows in the last 10 months – have likely drawn out additional pent-up demand. Foreclosure activities continue to drop, with distressed sales contributing only 16.0% to total home sales, down from 17.8 percent in March and 21.6 percent a year ago. The median sales-to-list price ratio in April was 95.5, up from 93.7 in January and 92.5 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 April home prices rose much faster than in the previous months. The two narrower indices (30-MSA and 10-MSA composites) similarly recoded a nearly 1.0 percent increase.