OXFORD – FNC’s latest Residential Price Index™ (RPI) indicates that U.S. property values remain relatively unchanged in September after enjoying six months of modest growth. Despite recent encouraging developments, such as a modest outlook for the overall economic recovery and unemployment, the pace of the housing recovery is likely to be constrained during the housing low season (fall and winter). Regionally, a number of northeastern housing markets affected by Hurricane Sandy will likely show a marked slowdown in recovery due to delays in mortgage financing, appraisals, foreclosures, and new construction.
Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, September home prices were unchanged from the previous month, but up 2.3% from September 2011, according to the FNC 100-MSA composite (national) index. On a quarterly basis, home prices rose 1.8% during the third quarter. Year to date, home prices were up 4.5% from January. Foreclosures as a percentage of total home sales continue to decline, down to 17.2% in September, compared to 26.7% in January 2012 and 23% in September 2011. Declining foreclosure sales continue to play out favorably on current price trends.
FNC’s RPI is the industry’s first hedonic price index built on a comprehensive database that blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes. As a gauge of underlying home value, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts reflecting poor property conditions.
All three FNC RPI composites (the National, 30-MSA, and 10-MSA indices) show similar moderating trends in September when compared to the month before or July. The two narrower indices remain slightly positive at 0.2-0.4%  On a year-over-year basis, home prices nationwide continue to strengthen, rising 2.3% from a year ago, the largest increase since February 2007 and the third consecutive month of positive year-over-year growth. The 30-MSA and 10-MSA composites also hit an all-time high in year-over-year price appreciation since February 2007. On a quarterly basis, the composites are up about 2.0% from the previous quarter.
The component markets tracked by the FNC 30-MSA composite index show a 60-40 divide in the month-to-month price change in September. (See the FNC Residential Price Index table.) Home prices rose 2.7% in Phoenix, 2.1%-Charlotte, 1.9%-San Diego, 1.9%-Las Vegas, and 1.8%-Orlando. Based on a three-month moving average (July, August, and September), Phoenix, Detroit, San Francisco, Sacramento, and New York show the largest price improvement, up 7.1%, 6.8%, 5.5%, 3.5%, and 3.5% respectively during the third quarter.
The year-over-year and year-to-date trends continue to show marked improvement. Most notably, Phoenix continues to lead the nation in the housing recovery. The city’s home prices rebounded 17.6% from a year ago and 19.2% from January 2012. Distressed sales in the Phoenix market continue to decline rapidly, falling well below the national average during the second and third quarters.