The latest FNC Residential Price Index (RPI) shows continued growth of home prices in August as the U.S. housing recovery remains well underway. The index moved 0.6 percent higher from the previous the month, making August the 18th consecutive month of rising home prices. According to the FNC RPI, August home prices have climbed to the levels attained in December 2009.
Improving housing market fundamentals, particularly the rapid declines in new foreclosure filings and foreclosure inventory, contributed to the continued strengthening of home prices. In August, foreclosure sales nationwide accounted for 12.4 percent of total home sales, down slightly from July’s 12.7 percent and by more than 4.5 percentage points from a year ago. However, there are signs that the price momentum has likely subsided entering the fall/winter low season in homebuying. The latest September median sales-to-list price ratio edged lower to 96.2 – a 3.8 percent listing price markdown among closed sales, down from 97.2 in August.
Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that August home prices increased from the previous month at a seasonally unadjusted rate of 0.6 percent. In a sign of moderating month-over-month price momentum, August’s price increase is smaller than June and July. On a year-over-year basis, home prices were up a modest 5.3 percent from a year ago. The two narrower indices exhibit similar month-over-month price momentums but a slightly faster year-over-year price increase.
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 sales of foreclosed homes, which are frequently sold with large price discounts, reflecting poor property conditions.
While August home prices are up in nearly all the major housing markets tracked by the FNC 30-MSA composite index, Phoenix and Los Angeles began to show first signs of price weakening, where prices were down 0.1 percent and 0.4 percent, respectively, from the previous month. This softening price trend in Phoenix and Los Angeles – two of the housing market’s most important barometers – emerged after a long streak of rapid price accelerations that averaged more than a 2.0 percent month-over-month increase. Denver, another strong-performing city in the current housing recovery, also recorded a small price drop in August.
At a 2.1 percent July-to-August price change, San Antonio recorded the largest month-over-month price increase. Home prices in Las Vegas climbed another 1.8 percent in August, the 10th consecutive month of rapid price accelerations. Home prices in Charlotte and New York also enjoyed a relatively strong performance. Based on the year-over-year and 20-month price changes, it is clear that the recovery remains uneven across the nation. Most notably, Chicago has so far delivered the smallest price appreciations for homeowners despite that the market is on the mend. At 21.8 percent in August, foreclosure sales continue to make a sizeable portion in the city’s total home sales.