The housing market is moving towards recovery with U.S. home prices increasing, found FNC in its latest study of the market.
U.S. home prices are continuing to climb in April, as stated by the most recent FNC Residential Price Index (RPI), up 0.7 percent from the preceding month. This gain indicates a strong increase in prices, the largest since June 2012, and is likely attributed to rising seasonal demand.
FNC’s RPI is the mortgage industry’s first hedonic price index built on a comprehensive database, which blends public records of residential sales prices along with real-time appraisals of property and neighborhood attributes. It eliminates underlying home values such as foreclosed homes that are sold with price discounts.
Home Prices Increases in the FNC RPI
Other valuable information from FNC’s report included:
- April home prices rose a great deal faster than proceeding months, based on record sales of non-distresses properties (existing and new homes) in the biggest 100 metropolitan zones.
- Home prices were up 4.6 percent based on a year-over-year basis.
- There was a 30 percent price jump in Phoenix in the past 12 months.
- Phoenix (29.1 percent), Las Vegas (15.8 percent), Sacramento (11.6 percent), and San Francisco (11 percent) display the largest price index based on a year over year basis.
- Over the past 12 months, home prices in Baltimore, San Antonio, Columbus and Chicago remain flat.
- Chicago is second to Detroit in foreclosure sales, with 1-in-3 homes sold in foreclosure during April.
For further perspective, here is a graph from FNC showing the home-price trajectory of the last 13-plus years:
What is Driving the Housing Recovery?
Low interest rates and low home prices, along with improved credit availability are moving the housing market towards recovery, are primarily driving the housing recovery, FNC reported.
Additionally, foreclosure activities are dropping, making distressed sales only 16 percent of total home sales – down from 17.8 percent in March and 21.6 percent only a year ago. Moreover, rising mortgage rates, which have hit all time lows in the past 10 months, have drawn out additional pent-up demand.