FNC: Home Prices Up 0.1%

FNC, Oxford, Miss., said its monthly Residential Price Index showed home prices moved slightly higher in February after dropping unexpectedly in January.

Not adjusting for seasonality, FNC said February home prices rose by 0.1 percent. On a year-over-year basis, prices continue to climb at a moderate pace, up 5.7 percent from a year ago.

“The spring housing market appears to be on solid ground amid continually improving labor market and rising home sales,” said Yanling Mayer, FNC housing economist and director of research. “Psychologically and economically, people prefer to buy homes when prices are rising than when they are falling, so a continued recovery of home prices is encouraging to both first-time and trade-up buyers.”

FNC said the proportion of final sales of foreclosed and REO properties comprised 13.1 percent of existing homes sales, up slightly from 12.6 percent in January but down from 14.5 percent a year ago. In the for-sale market, February’s asking-price discount averages 4.3 percent, unchanged from January. Forward-looking March data indicated moderate improvement in liquidity with a smaller price discount at 3.3 percent.

“Rising home prices inadvertently erodes affordability, particularly for would-be first-time home buyers,” Mayer said. “However, with low interest rates and rising access to low down-payment loans, we have a good reason to expect this spring’s first-time home buyers will become an important market driver.”

On a month-over-month basis, FNC said January’s top up-markets were Columbus, Ohio (2.9%); Tampa (2.9%); Nashville (1.5%); Houston (1.2%); and Miami (1.1%). FNC said February home prices were higher in 16 markets tracked by the FNC 30-MSA composite index, up from 11 in the previous month. Home prices weakened widely in the Midwest, down 2.5% in St. Louis, 1.9% in Detroit, followed by Cleveland (0.9%), Minneapolis (0.8%), Cincinnati (0.5%) and Chicago (0.4%). Despite widely reported severe inventory shortage in the West coast, February home prices were down in San Diego (1.1%), Los Angeles (0.5%) and Sacramento (0.2%). San Francisco and Riverside recorded only a modest increase at 0.6% and 0.8%, respectively.

FNC said on a year-over-year basis, February’s top growth markets were Portland, Ore. (12.7%); Miami and Orlando (11.4%); Denver, Las Vegas and Phoenix (11.3%); Nashville (9.9%); Sacramento (9.8%); Tampa (9.0%); and San Francisco (8.8%).

In Boston, conversely, price growth experienced one of the largest decelerations during the same period, down to 2.0% as of February from 10.4% a year ago.