The latest FNC Residential Price Index (RPI) shows U.S. home prices climbed rapidly since March, as strong sales and limited inventory relative to demand continue to be the key narratives highlighting the spring housing market countrywide.
April’s gain marks the largest March-to-April increase since spring 2005 when the last housing bubble was at full throttle and home prices were approaching near peak levels. Moderate price accelerations in the coming months are expected as the underlying price pressure remains positive, thanks to continued record low interest rates and rising credit availability.
Forward looking indicators from the for-sale market show median May time-on-market is down to 98 days from April’s 112 days, and the average asking-price discount continues to shrink, down from 3.6 percent in April to 2.8 percent in May.
April completed foreclosures comprised about 12.6 percent of total existing home sales, a decline of one percentage point since March. Preliminary May estimates show foreclosure sales have fallen to 7.5-year lows since fall 2007.
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, often reflecting poor property conditions.
The national index is based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas. All three indices were up by more than one percentage point at a seasonally unadjusted rate. The narrow 10-MSA composite posts the largest gain, rising 1.7 percent. The pace of year-over-year price appreciation improved steadily since January following a 12-month deceleration. Nationwide, home prices were up 5.3 percent since April 2014.
While much of the country is experiencing modest to strong spring market upturns, Baltimore, Orlando, and San Antonio continue to show weakening prices as of April. Foreclosure sales in Baltimore and Orlando continue to account for a sizable portion of existing home sales and are among the highest in the country.
A measurable regional gap exists in the appreciation rates year-over-year. As of April, home prices in the West and South regions have appreciated much faster than the Northeast and Midwest. Leading the chart are:
- Las Vegas (14.1 percent)
- Dallas (11.9 percent)
- Riverside (11.1 percent)
- Portland (10.9 percent)
- Los Angeles (10.0 percent).
Lagging the market’s gains are:
- Chicago (4.6 percent)
- Cincinnati (4.6 percent)
- Boston (2.9 percent)
- New York (2.2 percent)
- Cleveland (2.0 percent)
- St. Louis (1.7 percent)
- Washington D.C. (0.9 percent), where the annual rates of appreciation are below the national average.
For more information, visit http://www.fncresidentialpriceindex.com/.