The latest FNC Residential Price Index™ (RPI) shows U.S. home prices ended in 2015 with a modest increase as homes sales and residential construction continue to show solid growth. Nationwide, home prices rose at a seasonally unadjusted rate of 0.4 percent from November, or 6.2 percent since December 2014. On a quarterly basis, home prices were up 0.2 percent in the fourth quarter.
“Riding on a robust pace of home sales and new housing starts, home prices in 2015 finished strong with year-over-year growth at a 15-month high since October 2014. If judging on a seasonal basis, December’s month-over-month increase outpaced the same period of the past three years,” says Yanling Mayer, FNC’s housing economist and Director of Research.
“Although stock market jitters from tumbling oil prices and concerns of the Chinese economy could overshadow the underlying strength of the U.S. economy, homebuyers will continue to benefit from record low interest rates, rising mortgage credit availability, and the growing strength of the job market,” continues Mayer. “Building on the ongoing momentum, 2016 is likely to continue to see solid price growth.”
As of December, the proportion of final sales for foreclosed and REO properties comprises 10.9 percent of all of the total existing homes sales, down from 12.5 percent a year ago. Sales of foreclosed homes are at the lowest level since December 2007; when the housing recovery began in early 2012, one-in-five homes sales were foreclosure homes.
In the for-sale market, the fourth quarter of 2015 did not follow an expected seasonal uptrend in the asking price discounts. As of January, the medium discount is 4.0 percent, which barely moved since October.
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.
On month-over-month basis, December’s top up-markets:
- Baltimore (2.6%)
- St. Louis (2.6%)
- Las Vegas (2.1%)
- Portland (2.0%)
- Houston (1.7%)
December home prices were up in two-thirds of the markets tracked by the FNC 30-MSA composite index. Baltimore’s 2.6 percent increase followed a modestly up November (1.1 percent), but the glut of foreclosed homes – currently making 20 percent of total home sales – could dampen the strength of future price improvement. Baltimore has the nation’s largest share of foreclosure sales, along with Chicago, Detroit, and Tampa.
In Florida, home prices continue to make steady gains despite a relatively large number of foreclosure sales. The Midwest remains the nation’s weak housing spot, where home prices retreated widely in recent months and continue to be restrained by foreclosed sales and large price markdowns in the for-sale market. The year-over-year growth in the region’s six largest MSAs (except Cincinnati) underperforms the national average, some significantly so.
As of December 2015, cities experiencing the largest YOY price appreciation:
- Portland (14.2%)
- Denver (13.0%)
- San Francisco (12.6%)
- Las Vegas (11.9%)
- Miami (11.5%)
- Sacramento (11.5%)
- Phoenix (11.2%)
- Cincinnati (10.1%)
In Portland, December marks the 9th consecutive month of double-digit accelerating year-over-year growth. The Denver market likewise shows no signs of slowing down after 11 consecutive months of yearly growth in the double digits. Yearly price appreciation remains negative in Baltimore and Columbus.
For more information, visit www.fncinc.com.
