Below is this month’s update to the FNC Residential Price Index (http://www.fncrpi.com/) written by Yanling Mayer, a senior research economist at FNC. It looks like we are seeing significant price increases in some areas with at least some positive movement in almost every market. It appears that this summer should be a good one for the real estate market. To view the article below with accompanying charts and graphs, click here.
In a sign that the U.S. housing market is on track for a strong spring/summer buying season, home prices continue to show solid gains in May, according to the latest FNC Residential Price Index™ (RPI). Prices across the country climbed 1.2% following an upwardly-revised April which saw the largest March-to-April seasonal gain since 2005.
With homes selling at rapid pace, supply in many local markets remains relatively challenged amid rising sales. “While the participation of first-time home buyers has reportedly reached record highs, rising demand from potential trade-up buyers has also contributed importantly to the price growth in many markets,” said Bob Dorsey, FNC’s chief data and analytics officer. “Trade-up buyers continue to capture moderate to modest gains on their investment; in May 2015, realized home price appreciation, measured at an annualized rate, averages 2.6% across the country.”
Foreclosure sales have dropped to their lowest levels since October 2007. In May 2015, completed final sales of foreclosed and REO properties comprised about 10.3% of total existing home sales, a decline of nearly two percentage points from April’s 12.2%.
Average time-on-market drops rapidly, down to 85 days in June, compared to 96 days in May. Meanwhile, sellers are taking smaller cuts off their asking price, averaging 3.1% in May, compared to April’s 3.6%. Preliminary June estimates show a continued drop in the asking price discount nationwide, with buyers in the San Francisco market bidding up prices to pay an average of 4.8% above the listing price.
The data below 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. All three indices were up by more than one percentage point at a seasonally unadjusted rate, moderating slightly when compared to April, particularly by the narrow 10-MSA composite. Year over year, prices are rising by 5.4% nationwide.
Month over month, all major cities tracked by the FNC 30-MSA composite index, with the exception of Columbus and Baltimore, post modest to strong gains in May. Up by 3.5%, Sacramento showed the largest April-to-May price momentum. With declining foreclosure sales in recent months in the Midwest region, prices are rising in Cleveland, Detroit, Cincinnati, and Chicago which are ranked among May’s top up-markets.
- Cleveland (3.1%)
- Detroit (2.8%)
- Cincinnati (2.6%)
- Chicago (2.3%)
Year over year, Dallas leads the nation in the rate of annual price appreciation. “The city’s housing market is in a persistent run-up since early 2014 and has seen steady accelerations in YOY growth, thanks to a strong labor market and relatively affordable housing prices,” said Yanling Mayer, housing economist and director of research at FNC. “In a period of just over 12 months, the city has surpassed many of the country’s hottest markets to rank in the top in terms of year-over-year price increase.”
As of May 2015, cities that have maintained robust, double-digit YOY growth during the past last 12 months:
May 2015 YOY vs. May 2014 YOY
- Las Vegas (14.5%) 16.0%
- Orlando (12.6%) 17.3%
- Portland (11.0%) 10.7%
- Los Angeles (10.7%) 12.3%
The following markets have seen some of the largest moderations in the YOY growth during the last 12 months:
May 2015 YOY vs. May 2014 YOY
- Sacramento (7.6%) 24.0%
- Riverside-CA (9.4%) 22.2%
- Miami (9.6%) 20.6%
- San Francisco (5.5%) 16.5%
- Phoenix (5.9%) 14.2%