Metrics for the U.S. real estate market were mixed on a monthly basis but greatly improved based on a year-over-year gains. A report that forecasts home-price increases and declines in the hundred-biggest markets indicates that Los Angeles will see the most appreciation. In fact, three of the markets with the best outlooks are in California.
National Association of Realtors Chief Economist Lawrence Yun said last week that home prices are increasing much faster than rents. But historically low mortgage rates are keeping home purchases affordable.
The NAR reported that the national median existing-home price for all housing types was $173,000 last month, the same as in January but 11.6 percent higher than the in February 2012. Year-over-year gains have been made for 12 consecutive months — a feat that hasn’t been accomplished since May 2006.
Home prices in the 100 largest metropolitan areas will increase an average 2.2 percent between March 1 and a year later based on the future home price index forecast from Veros Real Estate Solutions. The quarterly index has forecasted home appreciation for three consecutive periods. Around three-quarters of all U.S. markets are expected to experience appreciation.
With projected appreciation of 11.8 percent, the Los Angeles-Long Beach-Santa Ana market had the strongest outlook. Close behind was the San Francisco-Oakland-Fremont market, where appreciation is expected to be 11.3 percent. The fourth-best market, San Jose-Sunnyvale-Santa Clara, was also in the Golden State.
“The Los Angeles market is forecast to be the nation’s top performer for the next 12-month period, with an upswing stemming from a significantly reduced housing supply that is down more than 70 percent from its 2007 peak,” the Veros report stated. “San Francisco, which appears in the second position of the forecast, is experiencing a serious housing shortage with supply down nearly 80 percent from its high in 2008.”
Phoenix-Mesa-Scottsdale was No. 3 with a 10.8 percent gain forecasted, then 9.9 percent in Midland, Texas. Atlantic City, N.J., had the worst outlook in the Veros report, with 4.2 percent depreciation projected.
U.S. home prices increased 0.7 percent in January compared to a month earlier, CoreLogic reported in its Home Price Index report. Prices, which reflect distressed sales, were 9.7 percent higher than in January 2012 — the biggest year-over-year increase since April 2006 and the 11th consecutive monthly increase. Delaware and Illinois were the only two states that didn’t see gains over January 2012.
Home prices are estimated by CoreLogic to have fallen 0.3 percent in February based on its pending home price index. The diminished outlook reflects seasonal variations.
The LPS Home Price Index indicates that property values inched up 0.3 percent to $208,000 in January from $207 in December. LPS says its index represents the price of non-distressed sales by taking into account price discounts for REO and short sales. The index has climbed from just $195,000 in January 2012 but remains depressed from the $265,000 peak in June 2006.
Georgia had the most appreciation between December and January of any state in the LPS index: 1.6 percent. The state’s performance was helped along by Atlanta’s 1.7 percent gain.
Maryland’s 1.1 percent followed, then Arizona’s 1.0 percent, Nevada’s 0.9 percent and South Carolina’s 0.9 percent. With an 0.9 percent decline, Connecticut posted the worst performance and was host to five of the 10-worst metropolitan areas. California and South Carolina’s each had two metropolitan areas in the Top-10.
Another measure of home values, the House Price Index from the Federal Housing Finance Agency, increased 0.6 percent on a seasonally adjusted basis between December and January to 194.6. The index was up 6.5 percent over January of last year.
FHFA’s January index, which reflects home purchases financed by Fannie Mae and Freddie Mac, remained 14.4 percent below the April 2007 peak and stood at the same level as in September 2004.
The FNC Residential Price Index indicated that home prices during January were up 0.3 percent in the 100 largest metropolitan areas compared to December. Compared to a year earlier, prices increased 5.7 percent.
“Seventeen of the component markets tracked by the FNC 30-MSA composite index show higher prices in January,” the FNC report said. “The strong price momentum continues in Phoenix and Las Vegas where prices were up 1.9 percent and 1.5 percent in January after rising 2.1 percent and 2.0 percent, respectively, in December.”
Residential building permits climbed to a seasonally adjusted annual rate of 946,000 in February from the revised January rate of 904,000, a report from the Census Bureau and the Department of Housing and Urban Development indicated. The rate was 707,000 in February of last year.
Single-family authorizations were at a rate of 600,000 in February, while multifamily authorizations were at a rate of 316,000, the government report indicated.
Housing starts increased to a seasonally adjusted annual rate of 917,000 last month from the 910,000 revised rate in January. The revised rate a year earlier was 718,000. The single-family rate was 618,000 in the latest month, and the multifamily rate was 285,000.
“Demand for new homes and apartments is definitely rising as the spring buying season approaches and more young people move out on their own,” National Association of Home Builders Chairman Rick Judson said in a statement.
Construction was completed at a seasonally adjusted annual rate of 711,000 in February, according to the Census Bureau, slipping from January’s revised estimate of 715,000 but busier than the February 2012 rate of 572,000. The single-family completed housing rate was 574,000, and the multifamily rate was 130,000.
A healthy housing market recovery is underway, according to the NAR. The Washington-based trade group reported that February’s existing home sales increased 0.8 percent from January to a seasonally adjusted annual rate of 4.98 million — the busiest since the expiration of the tax credit in November 2009. Compared to February 2012, completed transactions have risen 10.2 percent.
The portion of February sales that were single-family homes saw an 0.2 percent decline from January’s seasonally adjusted volume, while condominiums and co-ops jumped 8.8 percent.
A quarter of February’s sales were distressed foreclosure and short sales, NAR said. That was worse than 23 percent a month earlier but better than more than a third a year earlier.
As of the end of February, there were 1.94 million existing homes for sale, according to the NAR. The Feb. 28 total worked out to a 4.7 month supply, growing from the 4.3-month supply as of Jan. 31 but much improved from 6.4 months in February 2012.
The NAR said that the median time on market for all homes was 74 days in February, longer than 71 days in January but below 97 days in February 2012.
First-time buyer share was 30 percent of February’s activity, while all-cash share was 32 percent. Yun noted that there was also “an upward bump in the shares of investor and all-cash closed purchases in February.”