National Home Prices Show Little Change in Two Indices

Two reports on U.S. home prices were released on
Monday.  The two, the CoreLogic Home
Price Index (HPI) and the Clear Capital Home Data Index (HDI) cover different
time periods and use somewhat different methodology so the data is not
comparable between the two.  Here is a
brief summary of each.  

CoreLogic, using a repeat sales index, reports that prices
in the U.S. decreased 1.4 percent in November compared to October, the fourth
consecutive monthly decline.  On a
year-over-year basis prices, including distressed sales, were down by 4.3
percent.  This follows a -3.7 percent change
in October 2011 compared to October 2010. 
When distressed sales are eliminated, year-over-year sales were down 0.6
percent in November following a drop of 1.6 percent in October.

Mark Fleming, chief economist for CoreLogic said “With one
month of data left to report, it appears that the healthy, non-distressed
market will be very modestly down in 2011. 
Distressed sales continue to put downward pressure on prices, and are a
factor that must be addressed in 2012 for a housing recovery to become a
reality.”

Including distressed sales, the peak-to-current change in
the national HPI (from April 2006 to November 2011) was -32.8 percent.  Excluding distressed sales the change was
-23.1 percent.

The states with the highest percentage of price appreciation
in November (including distressed sales) were Vermont (+4.3), South Carolina
(+2.8) , and the District of Columbia (+2.1). 
The highest rates of depreciation were posted in Nevada (-11.2),
Illinois (-9.7), and Minnesota (-7.8).

Clear Capital reports on both December activity and
provides an end of year summary.  It generates
its indices in rolling quarter intervals that compare the most recent four
months to the previous three months and includes unweighted data on both fair
market sales and sales of owned real estate (REO).

U.S. prices declined 0.4 percent in December, giving back
some of the year’s earlier gains   Clear
Capital says this is the first “cooling off” following six months of modest
gains.  During that period
(June-December) prices were almost flat at -0.1 percent.

While national prices were flat in December some local
markets showed substantial volatility. 
Dayton, Ohio for example saw a 5.0 percent increase in prices in
December while Atlanta Georgia was down over 18 percent.

The national REO saturation rate was at a low point for the
year in December at 24.8 percent and was also showing consistent signs of
stability.  Again, it is a local
situation with the saturation in Detroit at 48.4 percent and many other markets
in the 30-45 percent range while Hartford and Raleigh, North Carolina have
rates only slightly over 5 percent.

On a year-over-year basis Clear Capital’s HDI reported a
decrease of 2.1 percent, again reflecting an increasing stabilization of prices
and decreasing REO saturation.

Clear Capital is forecasting 
continued stabilization into 2012, with U.S. home prices expected to
show a slight gain of 0.2 percent across all markets, ending five straight
years of declines but leaving home prices at levels last seen in 2001.  However, while national changes are projected
as minimal, the company expects substantial local volatility, with half of the
50 major metro markets in the sample expected to post gains for the year.  “Individual metros will experience the full
gamut of price movement, from double-digit growth to double-digit drops,” the
company says.

Florida is expected to stage a strong comeback in four of
its markets.  Orlando will have a price increase
of 11.7 percent; Miami and Tampa will be among the five highest performing
metros in the country with 8.8 percent and 7.4 percent growth respectively, and
Jacksonville will gain 4.3 percent.  This
growth will be the result of several factors including the beating they took
during the downturn.  They have also
experienced large increases in the values of their lower-priced homes and have
a high level of cash transactions (51.8 percent) indicating heavy investor
activity.

The forecasted volatility of the 50 metros in Clear Capital’s
sample is illustrated in the figure below. 
The black horizontal line represents the predicted 0.2 percent national
price increase; only 20 of 50 markets fall within +/- 2.5 percent of the
line.  These represent the so-called “stable”
markets.

…(read more)

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