On the heels of good news for the recovering U.S. real estate market, more positive data has been released. The latest reports point to continued home-price appreciation.
National Association of Realtors Chief Economist Lawrence Yun predicts that U.S. home price appreciation could exceed 7 percent if inventory supplies remain low. The trade group economist raised his expectations from his prior outlook, which called for an increase of between 5.5 percent to 6.0 percent.
NAR reported last week that the median home price was up 12.3 percent from a year earlier and has increased for 11 consecutive months.
The median price of a new home was $226,400 in January, the Census Bureau and the Department of Housing and Urban Development jointly reported Tuesday. The median price fell from $248,900 in November but was higher than $217,000 in January 2012.
The average sales price, however, tumbled to $286,300 from $304,000 and was $261,600 a year earlier, the Census Department data indicated.
Earlier reports from Lenders Processing Service and CoreLogic already indicated that home prices increased between December and January. Now, the S&P/Case-Shiller Composite of 10 Home Price Index says that national home prices inched up 0.2 percent in December. The 20-city index was up by the same amount.
Compared to the year-earlier period, the 10-city index was up 5.9 percent in 2012, while the 20-city index increased 6.8 percent. The report said that New York was the only city out of all 20 to post a year-over-year decline — though all cities were up on a seasonally adjusted basis.
“Atlanta and Detroit posted their biggest year-over-year increases of 9.9 percent and 13.6 percent since the start of their indices in January 1991,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in the report. “Dallas, Denver and Minneapolis recorded their largest annual increases since 2001.”
The fourth-quarter national composite index slipped 0.3 percent from the third quarter but has risen 7.3 percent from the fourth-quarter 2011, S&P/Case-Shiller’s national index indicated. But the report indicated that fourth-quarter 2012 prices were “back at their autumn 2003 levels.”
While Case-Shiller numbers indicate a fourth-quarter slowdown, the Federal Housing Finance Agency’s seasonally adjusted house price index indicates that purchase prices increased 1.4 percent from the third quarter and have risen more than 1 percent for three consecutive quarters. Compared to the final quarter of 2011, seasonally adjusted home prices were up 5.5 percent.
FHFA’s data indicated that home prices in the metropolitan statistical area of Phoenix-Mesa-Glendale were up 6.8 percent from the third quarter — more than any of the other 25-biggest MSAs. The worst performance was in the Edison-New Brunswick, N.J., MSA, where prices were down 0.8 percent.
FHFA, which utilizes home sales data on loans financed by Fannie Mae and Freddie Mac, said national prices were up 0.6 percent between November and December, have improved for 11 months in a row, and were up 5.8 percent over the past year.
Potential sequestration scheduled to take place next month won’t hurt home values in high-income areas like Washington, D.C., and North Carolina’s Raleigh and Charlotte, according to CoesterVMS Chief Executive Officer Brian Coester. Limited inventory and increased demand from homebuyers are among the factors supporting values, though he noted that Washington is an anomaly with its defined geographical area and a concentration of high-income earners .
“Home values are regional, even though they are often referenced as a whole across the U.S.,” Coester said in a written statement. “There aren’t any trends that impact every housing market to roughly the same degree.”
Gains made in the real estate market are easier to predict in some areas than others, according to Pro Teck Valuation Services.
“Many of the interior U.S. markets exhibit low volatility and are relatively easy to forecast,” Pro Teck CEO Tom O’Grady stated in the report. “Others on the East and West Coast show more volatility due to the combination of constrained supply and generally rising demand.”
The Waltham, Mass., company released its February Home Value Forecast, which indicated that two Core Based Statistical Areas in Massachusetts — Boston-Quincy and Cambridge-Newton-Framingham.– were the two best-performing CBSAs among top 200 CBSAs in the country. Three California CBSAs — Santa Ana-Anaheim-Irvine, Oxnard-Thousand Oaks-Ventura and Los Angeles-Long Beach-Glendale — also made the 10-best list.
At the bottoms of Pro Teck’s ranking was Cape Coral-Fort Myers, Fla.., one of two Sunshine State CBSAs on the 10-worst ranking. Also host to two CBSAs on the 10-worst ranking were Louisiana and New York.
Pro Tech says CBSA performance is based on sales and listing activity and prices; the number of months of remaining inventory; the number of days on the market; the sold-to-list price ratio; and foreclosure and REO activity.
The joint report from the Census Bureau and HUD indicated that sales of new single-family houses came in at a seasonally adjusted annual rate of 437,000 in January 2013 — the fastest pace since July 2008 according to the National Association of Home Builders. New home sales grew from a revised 378,000 rate in December and have soared from the revised January 2012 estimate of 339,000.
NAHB noted that new-home sales posted solid gains across all regions.
As of Jan. 31, there were a seasonally adjusted 150,000 new homes for sale, not much different from the estimated 151,000 new houses for sale at the end of last year and in January 2012, the government report indicated. But the NAHB noted that the supply of new homes fell to its lowest level in nearly eight years.
The latest inventory put the supply at 4.1 months, tightening from 4.9 months in the previous report and 5.6 months a year earlier.
“The surge in demand for new homes this January is an excellent sign that the housing recovery is gaining steam and helping put more people back to work,” NAHB Chairman Rick Judson said in a news release. “While we can’t expect to see double-digit sales growth every month, consumers are definitely coming off the fence as prices start to rise, and builders in some cases are having a tough time keeping up.
“Challenges related to credit availability, poor appraisals, dwindling lot supplies, spot shortages of skilled labor and rising materials costs are all weighing on the recovery process.”
The volume of home contracts that were signed in January was up 4.5 percent from December’s revised number, NAR reported. The trade group says that a sale is listed as pending when a contract has been signed but the transaction has not closed. Sales are usually finalized within one or two months of signing.
It was the highest level of contracts signed since April 2010, just before the home buyer tax credit deadline passed.
In addition, contract signings were up by 9.5 percent when compared to January 2012.
The improvement in contract signings brought the Pending Home Sales Index to 105.9 last month, NAR reported. The April 2010 reading was 110.9. An index of 100 is equal to the average level of contract activity during the base year of 2001.
“Aside from spikes induced by the tax credits, the last time there was a higher reading was in February 2007 when it reached 107.9,” the NAR report said.
The forecast from Yun calls for a more mild rise in home sales this year than in 2012.
Yun lowered his forecast for existing home sales to 5.0 million units from his previous outlook calling for 5.1 million sales.