U.S. home prices rose sharply in March, up 1.0 percent from February at a seasonally unadjusted rate, the fastest in nine months after tepid growth throughout the fall and winter months, according to latest FNC Residential Price Index™ (RPI).
On a year-over-year basis, prices continue to enjoy robust growth, rising 5.7 percent from a year ago. Throughout the first quarter, home prices were up 0.4 percent from the previous 2015 fourth quarter.
“March’s large rebound follows an expected seasonal trend, commencing the arrival of a busy spring homebuying season,” says Yanling Mayer, FNC’s housing economist and Director of Research. “It is also partly driven by persistent low inventory, which has already made this spring’s homebuying more competitive,” adds Mayer.
“In fact, we are seeing signs that the supply condition and resulting price bidding are driving prices of entry-level homes to rise much faster than the average property on the market,” continues Mayer.
As of March, the proportion of final sales of foreclosed and REO properties comprises 11.5 percent of existing homes sales, down from 13.1 percent in February and 12.7 percent a year ago. Preliminary April estimate indicates the share of foreclosure sales have fallen into the single digits.
In the for-sale market, March’s asking-price discount fell to 3.5 percent from February’s 4.3 percent. Continuing to reflect tight inventory and robust demand, the forward-looking April data indicates the average discount is reaching a three-year low at 2.7 percent.
On a year-over-year basis, March’s top up-markets:
- San Antonio (3.4%)
- Detroit (2.9%)
- Nashville (2.7%)
- Charlotte (2.6%)
- Cleveland (2.4%)
- Los Angeles, Columbus (2.3%)
- San Diego (2.0%)
Strong gains are seen broadly across the country. Of the 30 cities tracked for their MSA-level price trends, 22 cities showed a February-to-March gain of 1% or more. In San Antonio, home prices rebounded rapidly after declining throughout the winter months. In the South region, the Nashville and Charlotte markets were up 2.7 percent and 2.6 percent, respectively.
Broad gains are also seen across the Midwest, led by Detroit (2.9 percent), Cleveland (2.4 percent), Columbus (2.3 percent), and Chicago (1.6 percent). On the West Coast, Los Angeles (2.3 percent), San Diego (2.0 percent), and Riverside (1.0 percent) led the region in March’s price gain.
On a year-over-year basis, March’s top growth markets:
- Phoenix (13.1%)
- Miami (11.9%)
- Nashville (11.7%)
- Portland (11.3%)
- Orlando (10.8%)
- Las Vegas (10.3%)
At the start of the 6thyear into the recovery, Phoenix, Miami, Portland, Orlando, and Las Vegas continue to enjoy robust, double-digit price growth. In Nashville, home prices have reached all-time highs after rising rapidly for 12 consecutive months. March’s 11.7 percent year-over-year growth is the fastest price acceleration on record.
After leading with rapid recovery in 2013-2015, a number of West Coast cities including Los Angeles, San Diego, Riverside, and Seattle appear to be cooling down with year-over-year growth settling into more sustainable pace at the start of the busy spring homebuying. As of March, home prices in San Francisco and Sacramento are also rising at a more moderate pace than in the previous months.
For more information, visit www.fncinc.com.