Smaller Housing Price Swings Indicates Market is Stabilizing

December 19, 2011 (Jeff Alan)

U.S. home prices in the current rolling quarter ending in November posted a modest increase of 0.3 percent after declining by 0.6 percent last month with the smaller gains and losses in housing prices indicating that the market may finally be starting to stabilize according to Clear Capital’s Home Data Index (HDI).

Year-over-year, home prices were still 2.2 percent lower, marking the 14th consecutive month that annual home prices have declined.

Three of the four regions in the Index posted quarterly gains with the largest price gains posted in the Midwest (1.2%), followed by the Northeast (0.5%) and the South (0.2%), while the West (-0.8%) was the only region to post a decline.

By comparison, three of the four regions posted year-over-year declines with the West suffering the largest decline (-4.7%), followed by the Midwest (-3.0%), and the South (-1.6%), with the Northeast (0.4%) being the only region to post an increase.

Comparing home prices over the last six months produces a much more stable picture of the housing market with three of the four regions posting price gains, led by the Midwest (2.1%), the Northeast (0.7%). and the South (0.3%). The West (-2.2%) once again posted the worse performance.

Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital said, “The overall market stability in this month’s report gives me hope that housing markets are settling after a very turbulent two years. With only a one percent drop in national home prices since January and virtually no change in prices over the last six months, strong evidence suggests the big swings that many market participants are accustomed to could become a thing of the past.”

All of the cities in the 15 highest performing markets posted quarterly gains but with a considerable loss in momentum signaling a softening of prices coming into the fall quarters. The Washington D.C. area (4.8%) was the top performer, followed by Hartford (3.6%), Denver (3.4%), Orlando (3.4%) and Houston (3.2%).

All of the cities in the 15 lowest performing markets posted a decline in the last quarter with Atlanta (-9.7%) jumping to the top of the list, posting a quarterly price loss three times greater than the previous month (-3.0%). The next lowest performing market, Seattle (-4.4%), posted a quarterly price decline of less than half of Atlanta’s. Rounding out the top five were Memphis (-3.1%), Tucson (-2.8%) and San Diego (-2.6%).

The REO saturation rate for the highest performing markets averaged 21.6 percent, down from 22.8 percent last month, while the saturation rate in the lowest performing markets averaged 30.0 percent, unchanged from last month. Overall, the nationwide REO saturation rate was 24.6 percent.

“Although many of the nation’s major markets are experiencing no significant movement in prices, there are still several micro markets that are underperforming the overall market due to high levels of REO saturation. As lien holders continue to process their foreclosures and the flow of REOs continue to come to market, it will be critical for industry participants to ensure they understand the micro economic nature of specific markets,” added Villacorta.

Tags: Clear Capital, housing prices, price declines, REO, saturation rate, consumer demand, metropolitan areas

Source:
Clear Capital