According to a recent report from Clear Capital, the Houston residential market should be among the nations hottest 2011.

Downtown Houston - Image by Murat Taner/Corbis

The analytic and intelligence firm’s January 2011 Market Report projects Houston to enjoy a 3.6 percent year-year increase in home prices in 2011, perhaps due to Texas’ relatively low statewide unemployment rate of 7.9 percent. This estimation ranks Houston as the second highest performing U.S. market this year.

In 2010, Houston homes observed a 3.3 year-year increase in value, Clear Capital says. According to the Houston Association of Realtors, the market saw its all time best for the month of December last month with an average single-family home price of  $221,613.

Clear Capital forecasts the Washington D.C.-area to be the country’s no. 1 performer with a projected gain of 6.5 percent in home prices this year.

To view the report in its entirety, visit: www.ClearCapital.com.