The latest FNC Residential Price Index™ (RPI) shows U.S. home prices in September gained another 0.2% amid a surprise pickup in homes sales during the month. On a quarterly basis, average home prices rose 1.7% during the third quarter, down from 3.5% in the second quarter reflecting a seasonal pullback. Septembers year-over-year growth picked up the pace to reach 6.1%.
“Since July, the price growth has been in low gear despite the fact that the industry data continues to point to a persistent inventory shortage. In the meantime, mortgage rates continue to hover near historical lows amid loosening credit availability,” said Yanling Mayer, FNC’s housing economist and Director of Research. “On the demand side, slowing consumer spending in recent months, as well as weak inflation, is a telltale sign that there remains a great deal of economic uncertainty, which for the most part is holding back would-be homebuyers,” continued Mayer.
As of September, the proportion of final sales for foreclosed and REO properties makes up 9.9% of all of the total existing homes sales, up slightly from 9.3% in August but down by nearly one percentage point from a year ago. Foreclosure sales typically move along a seasonal uptrend starting in September as normal home-buying activity levels off and lenders intensify disposal of foreclosed and REO properties as the cold winter months approach.
In the for-sale market, average asking price discount among closed sales rose slightly from August’s 3.3% to 3.5%. Preliminary October estimates indicate a continued gradual seasonal uptrend.
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 final sales of REO and foreclosed homes, which are frequently sold with large price discounts, often reflecting poor property conditions. 1
The table above shows seasonally unadjusted month-over-month (MOM) and year-over-year (YOY) changes in three RPI composite indices. The national index is based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas. 2 The two narrower composites capture the price trends in the nation’s largest housing markets.
The chart below tabulates the latest MOM and YOY price trends, as well as the quarter-over-quarter change in the third quarter, for each MSA in the FNC 30-MSA composite index.
On month-over-month basis, September’s top up-markets:
- St. Louis (1.6%)
- Chicago (1.6)
- Cleveland (1.6)
- Las Vegas (1.3%)
- San Francisco (1.3%)
Rising markets outnumbered markets that moved lower during the month by 18 to 11, with San Diego recording a 0.0% MOM change. The Midwest region continues to outperform the rest of the country, delivering the largest third quarter price appreciations – more than doubling the national average. Foreclosure sales in St. Louis, Chicago, Cleveland and Cincinnati are down to levels approaching the national average.
In September, with the exception of the Bay area, home prices dropped across much of the West Coast. In the South, the Atlanta and Tampa markets have weakened notably in recent months. In Tampa, third-quarter home prices fell 4.1%, compared to a 1.7% positive growth in national average. In Miami, Orlando and Tampa, foreclosed and REO properties continue to account for 1-in-5 home sales, depressing home prices despite strong sales activity.
As of September 2015, cities experiencing double-digit YOY price appreciation:
- Denver (14.1%)
- Miami (13.3%)
- Las Vegas (13.0%)
- Portland (11.1%)
- Cincinnati (10.9%)
- San Francisco (10.9%)
- Dallas (10.06%)
- Chicago (10.0%)
Third quarter’s best-performing markets:
- Cleveland (5.4%)
- St. Louis (4.9%)
- Chicago (4.6%)
- Detroit (3.9%)
- Minneapolis (3.4%)
- Cincinnati (3.0%)
