OXFORD — The latest FNC Residential Price Index (RPI) shows that U.S. home prices continue to steadily improve, climbing another 0.5 percent in May in conjunction with continued improvement in housing market fundamentals.
Notably, the FNC RPI shows that the pace at which home prices are rising is rather modest, averaging 0.4 percent per month in the last six months. Similarly, the rate of annual price appreciation appears to be much slower and sustainable than reported by a number of other closely watched price indices.
Despite recent hikes in interest rates, the cost of mortgage financing continues to be near historical lows. An improving economy and housing market fundamentals continue to drive prices up. Foreclosures have dropped rapidly, with distressed sales contributing only 13.9 percent to total home sales, down from 16.2 percent in April and 19.6 percent a year ago. The median sales-to-list price ratio in May was 96.1., up from 95.4 in April and 93.2 a year ago.
Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that May home prices rose from the previous month at a seasonally unadjusted rate of 0.5 percent. The two narrower indices (30-MSA and 10-MSA composites) recoded a 0.4 percent increase.On a year-over-year basis, home prices were up a modest 4.0 percent from a year ago.
The majority of the markets tracked by the FNC 30-MSA composite index show rising prices in May, led by Nashville, Phoenix, and Las Vegas at nearly 2.0 percent each. In Phoenix, home prices continue to show no signs of moderation, rising 2.0 percent for 16 consecutive months since February 2012. Las Vegas enjoys a similar 16-month rising streak but at a more moderate pace of 1.2 percent per month. Foreclosure sales in both cities have fallen below the national average. Home prices were flat to slightly declining in San Antonio, Houston, Chicago, Washington, D.C., and Detroit. Although trending lower, foreclosure sales in Detroit, Chicago, Cleveland, and St. Louis continue to account for a significant portion of existing home sales at 39.5 percent, 26.8 percent, 26.3 percent, and 21.5 percent, respectively.
At 28.0 percent and 17.0 percent, Phoenix and Las Vegas continue to lead the country in the year-over-year price appreciation, followed by Sacramento and San Francisco at 11.2 percent and 10.7 percent, respectively. Year-over-year trends are slightly down in Portland, Baltimore, and Chicago. While home prices are rising in most markets, San Antonio, Houston, Chicago, Columbus, and San Antonio show little signs of year-to-date price improvement.