U.S. home prices increased 9.3% from July 2012 to July 2013 and increased 1.6% during the second quarter, according to Clear Capital's Home Data Index (HDI) market report.
However, home prices remained about 33.4% below their peak in 2006.
Looking at the country's four regions, the West had the largest increase in home values, up 17.8% year over year in July. The Midwest and the South posted yearly gains of 7.5% and 7.6%, respectively, while the Northeast saw only 4.8% growth.
The top 15 performing metro markets posted increases of more than 20% in the past year and 14 other metros posted gains of more than 15%.
Las Vegas was the clear leader with home prices increasing 31.2% during the past year – the first metro to surpass 30% since the start of the recovery. This metro has seen recent quarterly gains averaging 4.3%, signaling that it could retain its No. 1 spot over the near term.
‘Perspective is key here,’ Clear Capital wrote in its report. ‘While Las Vegas leads the recovery, its median price of $145,000 ranks it below 35 of the top 50 markets. This suggests low price points are in part driving Las Vegas' gains.’
Clear Capital noted that San Jose saw home prices increase 26% over the year, despite its high median price of $710,000. In this case, the increase was fueled by a strong local economy.
Home prices decreased in only two of the 15 bottom-performing metros tracked – and of those the declines were less than 1%. The remaining bottom-performing markets had average yearly increases of about 3%.
In Detroit, which saw its housing market ravaged by the downturn, home prices have risen 9.6% over the last year and while the metro remains on the lowest performing list, its quarterly gain of 1% was the highest in its the group. Clear Capital noted that these gains were particularly impressive considering the city had an REO saturation rate of 42%, more than 27 percentage points higher than the national average.
‘While July home prices continued to ramp up throughout the country, led by Las Vegas, posting more than 30% yearly growth, let's not forget a healthy recovery means moderation as the new normal takes hold,’ said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. ‘Over the second half of 2013, we continue to call for a moderation in home price trends. A rising price floor will dampen some potential homebuyers' appetites, particularly as recent gains bring many markets back into pre-bubble equilibrium. In other words, homebuyers are starting to adjust to the new normal, where steep discounts from the peak are not as attractive as they once were.’
‘Having said that, if housing inventory continues rising, it should help alleviate some of the recent pressure on prices, as well as homebuyers' confidence in the market's health overall,’ Villacorta said.
He noted, however, that the gains ‘will not last over the long term.’
‘We expect most of the major markets across the country to follow the path of sharp upward corrections in the short term, followed by moderating gains as markets fall back in line with their long run levels,’ he said. ‘Phoenix, for example, is now seeing quarterly growth that supports a yearly growth rate more in line with 10%, as opposed to the current yearly gains of 23.3%. The exact timing of this moderation will vary market by market.’
Villacorta noted that it would likely be some time before REO saturation subsides in Detroit, given the current uncertainty in the city's finances.