US market inching towards recovery
Existing and new property prices in the United States increased in June for the third consecutive month, seeing gains of 0.9%, according to the latest index from FNC Inc.
The increase follows a 0.8% rise in May and a 0.5% increase in April, the company’s residential price index that covers existing and new home sales, but excludes foreclosed homes shows.
However, the price increases vary between markets and those who have gained are likely driven by seasonal upswings rather than a more fundamental improvement in the nation’s housing conditions, says the FNC report.
All three RPI composite, the national, 30 MSA and 10 MSA indices, show month on month increases the last three months, rising more rapidly in June at 0.9%, 0.7%, and 1.5%, respectively.
Since March, seasonal upswings resulted in a 2.1% improvement in home prices nationwide, FNC said. Among the metro areas tracked by the 30 MSA composite, there was a 50-50 split in June between markets with monthly increases and those with declines from the prior month.
Boston, Chicago, Cleveland, Denver, Detroit and Nashville saw higher prices in April, May and June, with gains averaging between from 0.6% to 3.5%. Boston in particular, enjoyed an extended rebound with prices going up 9.1% in the first half of 2011.
Cincinnati, Columbus, Ohio, Minneapolis, Nashville and San Francisco also showed robust year to date price trends, rising between 4% and 5% since January.
Las Vegas and Orlando, on the other hand, lead the nation in price declines, down 5.9% and 4.1% respectively since January. Orlando is down 15.8% compared to a year earlier and Las Vegas is down 12.5% from 2010 prices. Others with a 10% or more decline in home prices from a year ago include Atlanta, Sacramento and Tampa.
Meanwhile, the latest data from the National Association of Realtors shows that sales are down but well above the levels of a year ago.
All regions showed monthly declines except for the West, which continues to show the highest level of sales contract activity, according to its Pending Home Sales Index, a forward looking indicator based on contract signings. It fell 1.3% to 89.7 in July from 90.9 in June but is 14.4% above the 78.4 index in July 2010. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said sales activity is under performing. ‘The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,’ he said.
‘We also need to be mindful that not all sales contracts are leading to closed existing home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process,’ he added.