Us property prices rise by 2pc
Photo credit: Michael Patrick
US property prices increased by 2 per cent in July compared to the previous quarter, according to Clear Capital. The firm's analysis shows that national home prices picked up the pace of growth over both the rolling quarter and year, with one-third of the top metros posting double-digit annual increases and the bottom 15 metros all seeing prices stabilise.
Strengthening short term trends were echoed in the West and Midwest, with 4.4% and 2.1% quarterly growth, respectively. Meanwhile, the South held its ground with quarterly gains of 1.5%, and the Northeast saw price growth of 0.4%, a slight step back from last month's 0.8% quarterly gains.
A drop in REO saturation in the Northeast over the last quarter of nearly three percentage points to a low rate of 7.7%, contributed to the softening quarterly gains. Typically a reduction in the percentage of distressed sales would have a positive impact on prices, but in the case of the Northeast, lower rates of REO sales in part reduced momentum in low tier gains (those homes selling for $169,000 and less). Low tier quarterly growth fell to 0.7% from last month's quarterly gains of 1.8%, taking some wind out of the sails of the region's progress overall. Given the low distressed sale environment, continued progress in the Northeast will be more dependent on mid and higher priced homes picking up over the next several months.
Nonetheless, quarterly growth across regions hasn't been this robust since October 2011 when prices experienced a short burst in gains, lacking endurance to bring positive long term trends. Conversely, two out of four regions have now seen rolling quarterly growth over the last two months, and three out of four regions have experienced quarterly gains over the last 5 months, fueling yearly gains.
Yearly growth for the broader national market expanded to 2.2% in July, 0.5 percentage points higher than June. Boosting growth at the national level, the West saw home prices roll up an impressive 6.2% over the previous year. The South and the Northeast also contributed to national price growth, with 1.8% and 1.6% yearly gains, respectively. While the Midwest has yet to post long term growth, the slight decline of 0.1% improved over last month's yearly losses of 0.6%.
July marked the third consecutive month of national yearly gains, with longer term price trends at the national level last seen this strong in September 2010, when the First-Time Homebuyer Tax Credit temporarily drove prices higher. Without external stimulus driving demand, this latest round of gains is particularly encouraging. Strengthening fundamentals have finally allowed prices to move beyond stability and into a seemingly sustainable growth mode, providing reason for consumers to feel more confidence in housing overall.
"July home price trends continued to show promise at a time when the strength of the broader economy is in question on many fronts," said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. "The national housing market defied the drag of a softening economy with increasing gains of 2.0% over the last rolling quarter. Housing gains in the West continued to lead the nation, and more importantly, for the second month in a row, the price rebound has broken out of the low price tier segments into higher priced homes. As the pool of buyers expands, the West continues to position for the next phase of recovery."
"While significant risks remain at large, housing now has the potential to enter a positive feedback loop. Price increases could lead to increased confidence. This could motivate buyers, propelling the recovery in spite of the potential economic slowdown outside the housing market. Of course it's still possible that housing could experience a pull back if contagion from other economic sectors bleeds through, but right now there appears to be a healthy level of resilience."