The latest FNC Residential Price Index™ (RPI) shows the nation’s average home prices ended in 2014 with a slight increase after a three-month decline. Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the index bounced back slightly from November but continues to indicate decelerations in the annual growth of home prices nationwide. Throughout the fourth quarter, home prices were down 0.2% from the third quarter, dragging the year-over-year growth down to about 5%.
Completed foreclosures in December comprise about 13.7% of total existing home sales, down from 14.7% from November and 14.4% a year ago. In the for-sale market, the asking price discount and time-on-market continue to trend upward. As of December, the median discount is 5.1% while the time-on-market is 124 days, up from November’s 4.7% and 113 days. Preliminary January estimates show signs of further slowing in the average pace of home sales nationwide.
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 final sales of REO and foreclosed homes, which are frequently sold with large price discounts, likely reflecting poor property conditions.
The two broader indices were up slightly in December at about the same pace, while the 10-MSA composite index moved lower by another 0.2%, its fourth consecutive month-to-month decline. The indices’ year-to-year changes show average home price appreciation across the country is about 5.0% at year-end 2014.
Home prices are up in 20 MSAs, outnumbering markets that declined by 2 to 1. After a strong November that saw a 2.5% increase, Miami home prices rose another 2.3% in December. St. Louis and Detroit also showed modest increases of 1.5% and 1.4% respectively. In Tampa, Minneapolis, Chicago, and Orlando, home prices rebounded with a more than 1% increase after declining modestly in the previous month. Among the down-markets, San Francisco and New York each recorded a fifth consecutive month of falling prices at 1.9% and 1.7% respectively. On average, San Francisco Bay-area home prices dropped 1.9% per month in the last five months, sending the fourth quarter price down 5.3% — the largest decline among the nation’s top housing markets. Home prices in Washington D.C. are also notably weak in recent months.
As of year-end 2014, markets with the fastest annual rate of home appreciation are Orlando (14.5%), Riverside (12.9%), Las Vegas (12.7%), and Miami (11.5%). Following recent declines, Washington D.C., San Francisco, and Nashville have joined Baltimore and St. Louis to become the few cities experiencing an annual price decline. Cities with below-average price appreciation also include Cleveland (0.9%), New York (1.1%), San Antonio (2.0%), and Columbus (2.6%).