Clear Capital’s June Home Price Index points to a sustained recovery in the struggling U.S. residential real estate market. The 1.7% quarterly and yearly gain was bolstered by strong gains in the West and a marginal price recovery in the Midwest. The numbers are causing no small amount of optimism, and experts project gains in many regional, national and metro markets throughout the rest of 2012. Most gains are occurring on the lower end of the price spectrum in the South and Midwest, but increases in demand in the West are resulting in price increases in every price bracket. For more on this continue reading the following article from Property Wire.
Home prices and sales are improving across the United States with the West leading the way to recovery, according to the latest date from real estate valuers Clear Capital.
Its June Home Prices index shows that June saw further support for a sustained housing price recovery with property prices rebounding with quarterly and yearly gains of 1.7%.
Regional performance improved across the board and the West led the regions in price recovery and forecasted growth, offering insight to the next chapter of recovery.
The Midwest gained ground over the rolling quarter, recovering from the persistent price declines over the last year.
Home price forecast through 2012 now shows continued growth for the nation, regions, and a majority of the top MSAs.
‘June home price trends provided further evidence that housing has turned the corner, with the momentum of the recovery picking up speed,’ said Alex Villacorta, director of research and analytics at Clear Capital.
‘Prices continue to climb at the national level, with each of the four regions showing improvements over last month. The West continued as the front runner in terms of overall market correction, with growth branching out from the low tier to mid and higher priced homes. Seeing price growth expand to other sub-markets is a key step in the evolution of this recovery. Even the Midwest started to catch up to the other regions, shedding the drag of recent declines,’ he explained.
‘Looking forward over the rest of 2012, we expect to see national, regional, and most metro markets improve by varying degrees. And while it’s encouraging to see broad based advancements coupled with positive forecasts, we remain cautiously optimistic. The current strength in housing fundamentals remains vulnerable to domestic and global economic challenges,’ Villacorta pointed out.
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‘But right now the market is the strongest it’s been since the start of the downturn, and barring a major economic meltdown, we expect to see this organic growth sustain and strengthen through the end of the year,’ he added.
National quarterly gains of 1.7% came in 1.3% stronger than in May. The West saw quarter on quarter growth of 3.5%, an increase of 0.8% on the previous month. With four consecutive months of quarterly gains, the West has held the lead in short term growth since May. Giving the West an additional boost, growth spread across all price tiers, an important next step in the progression of this recovery.
The recovery has generally started in lower priced segments for most markets seeing gains, however demand in the West is now outpacing supply and driving prices up in the low, mid, and even high priced homes.
The South continued to see growth in June of 1.5% over the quarter, and the trend strengthened slightly over May’s rate of expansion of 1.2%. Meanwhile the quarterly performance in the Northeast doubled over the previous month, extending gains by 0.8% in June.
The Midwest’s quarterly home prices saw the largest jump over the previous month, posting growth of 1.2%. When compared to May’s quarterly losses of 2.0%, it’s clear June brought a welcomed boost to the region that now appears to be catching up to the others over the short run. Trailing close behind the South, the Midwest surpassed the Northeast in gains on a quarter on quarter basis.
Typical for a market in the early stages of recovery, low tier sales in the Midwest, that is sales less than $101,000, saw the biggest quarterly gains of 2.2%, nearly a 4% up on the previous month’s losses. And in contrast to the West, where an accelerated recovery is underway across all price tiers, the mid and top tier segments of the Midwest continue to lag behind the gains of the low tier homes with quarterly growth of 1.6% and 0.4%, respectively.
The report also shows that year n year prices are improving and expected to grow through 2012 with additional growth of 2.5% forecasted by the end of the year. The current and future expected growth at the national level is a direct result of broad based regional gains increasing in momentum, coupled with progress expanding across sectors, as seen in the West.
Falling in line with short term trends, the West made the largest contribution to national gains over the last year, posting annual price advances of 4.1%. The superior performance, fuelled by expanded gains across price tiers, is expected to continue through 2012 with an additional 5.75% growth over the next two quarters.
Meanwhile, Northeast home prices tacked on 2.3% over the last year. This region, having experienced moderate yearly growth over the last nine months is also expected to see additional gains of 1.8% through the end of 2012.
The South saw prices inflate 1.5% over the last year, an improvement over the annual growth of 0.9% shown in the previous month. The accelerating trend is expected to continue, with the South forecasted to see home prices notch up another 1.9% by year’s end.
Certainly the Midwest made improvements in long term price trends, but just missed turning a gain with year on year losses of 0.6%. Although the region continued to see prices slide, the losses tapered significantly over the previous month’s declines of 3.1%. And the correction should continue, with projected gains for the Midwest of 1.1% for the last half of 2012. While the shift in long term trends for the Midwest has yet to create tailwinds for the national performance, the previous drag associated with continued losses has been alleviated, said the report.
The top 50 metro markets generally made positive headway in June. The large majority of markets saw quarterly gains, while only seven markets saw prices slide. Of those markets that posted quarterly losses, only four saw declines greater than 1%. And while this recovery will continue to take place market by market, the relatively moderate losses among this group are encouraging.
The remaining 43 MSAs turned out growth over the last quarter, with average gains of 3.0% doubling the rate of average declines. Additionally, 10 of the 43 advancing markets saw quarter on quarter price growth exceed 5%, providing evidence the recovery is also picking up steam on a metro market level.
Looking ahead to the forecast for the rest of 2012, metro markets from the Western region should see some of the highest gains. Four out of the top five forecasted MSAs reside in the West, with Seattle and Phoenix leading the way.
Considering only eight out of 50 MSAs have negative projections through 2012, the housing market is on track to see progress outweigh minor setbacks, the report added. The progression of the recovery, however, remains vulnerable to peripheral risks in the jobs market, an uncertain regulatory environment, and global economic threats.
The market is undoubtedly healing as the recovery unfolds, and is now the strongest it’s been since the collapse in 2006. Excluding a major economic obstacle, an extended housing rebound should continue through year’s end, it concluded.
This article was republished with permission from Property Wire.