The latest FNC Residential Price Index™ (RPI) shows the nation’s housing market started the year with a small decline in average home prices. Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the index fell 0.3% in January but continued to rise at a modest rate of 4.4% for its 31 consecutive months of year-over-year gains. As of January, the annual rate of price appreciation is at 10-month lows.
Completed foreclosures in January comprise about 15.5% of total existing home sales, up from 13.6% in December but down from 17.3% a year ago. In the for-sale market, the asking price discount and time-on-market are at 24-month highs. As of January, the median discount is 5.4% while the time-on-market is 133 days. Preliminary February estimates show signs of a modest increase 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. [1]
The table below shows the seasonally unadjusted rates of month-over-month and year-over-year changes in the FNC national index (a 100-MSA composite index) as well as 30- and 10-MSA composites.[2] All three indices recorded a modest decline in January at a similar pace of 0.3-0.4%. The 10-MSA composite experienced the fastest decelerations in year-over-year growth, dropping more than one percentage point from 4.9% in December to 3.7% in January. The national and 30-MSA composites slid 0.6% and 0.9% respectively, dragging average home price appreciation down to about 4%.
The chart below tabulates the month-over-month and year-over-year changes, showing the latest price trends for each MSA in the FNC Composite 30. Home prices are up in only 10 MSAs and are outnumbered by declining markets by 2 to 1. Seattle and Las Vegas showed the best performance, up 2.3% at 1.6% respectively, followed by Charlotte at 1.4%. In Las Vegas, home prices are at 36-month highs and have appreciated more than 63% during the last three years. Among the down-markets, Minneapolis and Chicago recorded the largest price decline at 2.3% and 1.9% respectively. Home prices in a number of other major cities also experienced modest declines: New York (1.0%), San Francisco (1.1%), Sacramento (1.3%), Tampa (1.4%), Cincinnati (1.5%), and Riverside-CA (1.6%).
As of the beginning of 2015, cities appreciating year-over-year at a double-digit rate are down to three–Las Vegas (13.4%), Orlando (12.4%), and Riverside (10.7%)–from a total of 15 a year ago. Despite the deceleration in housing activity in recent months, most major cities continue to show robust price growth, including Miami (9.3%), Charlotte (8.9%), Seattle (8.8%), San Diego (8.1%), Los Angeles (7.9%), Sacramento (7.3%), and Phoenix (7.0%). As of January, only Washington D.C., Detroit, St. Louis, and Cincinnati show a small decline from a year ago.
[1] The hedonic 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.
[2] 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.
