Prices rose 2.6% in May and were up 12.2% up on the same month last year, the biggest year on year increase since February 2006, according to the latest report from data analysis firm CoreLogic.
Excluding distressed sales, prices were up 11.6% on a yearly basis. Distressed sales include properties that have been seized by lenders and short sales, where the struggling home owner is allowed to sell the property for less than the outstanding mortgage.
The firm said that the recovery in the housing sector has gained momentum this year, with tight inventory pushing prices higher. Still, prices nationally remain cheap compared to during the housing boom, which has spurred demand from investors and home owners.
‘Across the country, pent up demand and continued low interest rates are fuelling strong demand for a limited inventory of properties. We expect that trend to continue to drive up prices throughout the balance of the summer months,’ said Anand Nallathambi, CoreLogic's chief executive officer.
Nevada saw the biggest price increases, followed by California, Arizona, Hawaii and Oregon and the report forecast prices will rise by another 2.9% in June for a yearly gain of 13.2%.
The West, South, Midwest and Northeast are forecasted to see total 2013 gains of 10.1%, 5.2%, 4.6% and 4.1%, respectively. These gains are comprised of year to date growth and two quarter forecasts of 2.2%, 1.5%, 1.8% and 1.5%, respectively.
The firm believes that moderation is the key to a sustained recovery. With this in mind, projected regional growth rates are healthy compared to year on year gains through June of 17.1%, 7.1%, 6.2% and 4.3%, respectively.
While metro level market trends showed continued variability, they remained positive overall. Local market economic fundamentals continue to drive varying degrees of price growth. Indeed, some 45 out of the top 50 major metro markets are forecasted to see yearly growth over the final two quarters of 2013. Four of the five markets not expected to see home price gains over the next two quarters are projected to see declines of less than 0.5%.
Las Vegas held its lead in June with yearly gains of 29.3%. The metro is one of six others to have realized more than 20.0% in yearly growth. Considering the two quarter forecast for Las Vegas of 5%, the metro will likely end the year as the recovery front runner with total 2013 gains of 19.4%.
At the opposite end of the market Cleveland is expected to continue to struggle with home price declines of 2.2% over the next two quarters. The metro has yet to see the positive fundamental shift in its distressed sale environment that other markets have seen prior to recovery.
‘June home price trends and forecasts were nearly all positive across the country. We saw quarterly, yearly and six month forecasts all tick up, relative to the past few months’ performance. These improved trends signal spring buying activity continues to have a positive impact, while our forecasts point to moderation ahead,’ explained Alex Villacorta, vice president of research and analytics at Clear Capital.
‘Certainly this is an interesting and important dynamic unfolding and while it could seem contradictory at the surface, perspective lends clarity. Increasing gains are great news for homeowners and to be expected at this time of the year, when home buyers are typically most active,’ he said.
‘While there is a lot of buzz right now in terms of double digit housing gains, over the long run, we don’t expect to see the current rates of growth sustained. Keep in mind this is really not a bad thing. National growth for all of 2013 is expected to hit 6%, lower than current yearly growth of 8.6%, yet higher than historical norms between 4% and 5%. After more than a full year of recovery, we consider the current momentum and expected moderation a really healthy move toward a more sustained recovery,’ he added.
He also pointed out that at the metro level there were some subtle, yet notable trends in June. ‘While price trends continued to diverge at the micro market level, they are for the most part positive. Our forecasts highlight expected price gains across the country over the rest of 2013. This is a really important piece to the recovery puzzle right now,’ said Villacorta.
‘The fact that 45 out of 50 major metro markets are expected to see price gains over the next six months speaks to this move toward a more balanced, broad based recovery, another really healthy sign,’ he explained.
‘It’s great that six metros have seen more than 20.0% growth over the last year, but on their own these few markets can’t support a long-term national recovery. Seeing the bulk of major metros move into positive territory is truly good news, even if their gains are still in the single digits,’ he added.
