Several reports out this week show that U.S. home prices continued to increase in March and also during the first quarter – albeit at a much slower pace compared to the fourth quarter of 2013.
The S&P/Case-Shiller Home Price Indices show that home prices increased 0.2%, nationwide, in the first quarter, compared to the fourth quarter of 2013. On a year-over-year basis, home prices increased 10.3% compared to the first quarter of 2013. The 10- and 20-City composites posted year-over-year increases of 12.6% and 12.4%, respectively.
Looking just at March, home prices increased about 0.9%, compared to February, according to the 20-City Composite. Nineteen of the 20 cities showed positive returns – New York was the only city where home prices declined.
‘The year-over-year changes suggest that prices are rising more slowly,’ says David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, in a release. ‘Annual price increases for the two composites have slowed in the last four months and 13 cities saw annual price changes moderate in March. The National Index also showed decelerating gains in the last quarter. Among those markets seeing substantial slowdowns in price gains were some of the leading boom-bust markets including Las Vegas, Los Angeles, Phoenix, San Francisco and Tampa.’
As per the report, Chicago saw a year-over-year increase of 11.5% in March – the highest year-over-year gain for that city since December 1988. Las Vegas and San Francisco, the cities with the highest returns, saw home price appreciation slow to approximately 21%; their post-crisis peak returns were 29.2% and 25.7%, respectively. At the lower end was Cleveland, with a year-over-year gain of 3.9%.
‘Despite signs of decelerating prices, all cities were higher than a year ago and all but New York were higher in March than in February,’ Blitzer says. ‘However, only Denver and Dallas have set new post-crisis highs and they experienced relatively lower peak levels than other cities. Four locations are fairly close to their previous highs: Boston (8%), Charlotte (9%), Portland (13%) and San Francisco (15%).
‘Housing indicators remain mixed,’ Blitzer adds. ‘April housing starts recovered the drop in March but virtually all the gain was in apartment construction, not single family homes. New home sales also rebounded from recent weakness but remain soft. Mortgage rates are near a seven-month low but recent comments from the Fed point to bank lending standards as a problem. Other comments include arguments that student loan debt is preventing many potential first time buyers from entering the housing market.’
As of the end of March, average home prices across the U.S. had rebounded back to levels posted in the spring of 2004.
To view the S&P/Case-Shiller HPI, including a breakdown of home price trends by region, click here.
Meanwhile, the Federal Housing Finance Agency (FHFA) HPI, which uses a different methodology, shows that U.S. house prices rose 1.3% in the first quarter, compared to the fourth quarter – marking the eleventh consecutive quarterly price increase in the purchase-only, seasonally adjusted index.
‘Although the first quarter saw relatively weak real estate transaction activity – in part due to seasonal factors – home prices continued to push higher in the first quarter,’ says Andrew Leventis, principal economist fr FHFA, in a statement. ‘Modest inventories of homes available for sale likely played a significant role in driving the price increase, which was similar to appreciation in the preceding quarter.’
The FHFA's HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
On a year-over-year basis, the FHFA report shows that home prices rose 6.6% from the first quarter of 2013 to the first quarter of 2014.
On a month over month basis, the report shows that U.S. home prices increased 0.7% in March compared to February.
Recently the FHFA started offering its ‘expanded-data’ HPI, which adds transaction information from county recorder offices and the Federal Housing Administration. Based on the expanded index, home prices rose 1.4% in the first quarter compared to the fourth quarter. In addition the expanded HPI shows that home prices were up about 7% in the first quarter compared to the first quarter of 2013.
To view the FHFA HPI report, including a breakdown on home price appreciation by region, click here.
In addition, Black Knight Financial Services released its monthly HPI report, which shows that home prices increased 1% in March compared to February. The report includes distressed sales but takes into account price discounts for REO and short sales.
According to the Black knight HPI, home prices were up about 7% in March compared to March 2013. What's more, prices were about 1.5% in the first quarter compared to the fourth quarter.
The average home price in March was $235,000 – well above the average home price of $231,000 in March 2013 but 12.8% below the peak price of $269,000 in June 2006.
States that saw the biggest gains in home prices were Michigan (1.6%), District of Columbia (1.6%), Washington (1.5%), Oregon (1.5%) and Illinois (1.5%).
States the saw the lowest gains in home prices in March included Arkansas (0.4%), New Hampshire (0.3%), Vermont (0.2%), Rhode Island (0.1%) and Connecticut (-0.1%).
Cities that saw the biggest gains in home prices in March included San Jose, Calif. (2.2%), San Francisco, Calif. (2.0%), Detroit (1.8%), Seattle (1.8%) and Grand Rapids, Mich. (1.7%).
Cities that saw the lowest gains in home prices in March included Torrington, Conn. (0%), Providence (0%), Hartford (-0.1%), Norwich (0.3%) and New Haven (-0.6%).
To view the Black Knight HPI report, click here.