U.S. housing market research firm Clear Capital is predicting a continued recovery through 2013 based on findings in its latest Home Data Index. The firm reports the U.S. retained quarterly house price gains through the winter for the first time since 2006 and is projecting additional growth of 1.7% by the close of the year. Analysts note that the majority of major markets started the year on solid footing and are taking prices' resilience through the winter months as a sign of strength. The next thing to watch for, say experts, is more balanced growth as gains in key cities spread throughout the rest of the country. For more on this continue reading the following article from Property Wire.
For the first time since 2006, quarterly home prices in the United States remained positive over winter and forecast point to continued growth in 2013.
The latest Home Data Index report from real estate firm Clear Capital shows that in the first three months of 2013 prices increased nationally by 0.9% and the firm forecasts further growth of 1.7% over the next nine months.
Coming out of winter, national prices were up 6.5% over the year. As prices continued to move up incrementally over the winter months, slight quarterly gains fuelled stronger yearly growth.
Regionally, the West led with yearly gains of 14.5% and made the largest move forward over February's 13.6% yearly growth. The Midwest, Northeast and South saw home prices rise over the year by 4.2%, 3% and 5.1%, respectively.
According to Alex Villacorta, director of research and analytics at Clear Capital it has been seven years since home price growth continued throughout winter. 'This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consumers and lenders alike that the recovery is real. As buyers become more confident the recovery is sustainable, this sentiment should grow to create a positive feedback loop,' he said.
He pointed out that it is further evidence that the home market the recovery is maturing from the relatively rapid price correction seen in 2012 and it was a good sign that growth has now slowed to a more manageable climb that will make the recovery sustainable. Too much rapid growth would not be good for the market, he pointed out.
'Phoenix is a great example where we expect to see that cooling trend support a more sustainable recovery. After a strong year of growth, rising prices should bring the metro back into a more normal range of growth. In addition, the typical influx of spring and summer supply will also help subdue price gains. All in all, this is great news for housing, where prices are sustainably on the rise, demand continues to grow, and the expected supply influx should curtail any bubble like price trend behaviour,' explained Villacorta.
He added that home prices across the nation are starting the second quarter of the year on solid ground and are expected to remain in growth mode throughout 2013. The three quarter forecast for the nation is 1.7%, which would bring 2013's total yearly price growth to 2.6%. Villacorta described the winter seasons as 'solid'. Regionally, the West, Midwest, South and Northeast are expected to see additional gains of 0.7%, 1.9%, 1.8% and 2.1% over the next three quarters.
'These rates of growth highlight a potential shift starting to take place and 2013 should see a more balanced rate of growth across the regions. Recovering hard hit markets, like the West, could see buyer interest cool due to rising prices, while more fair market sellers might help boost supply. With further confirmation the recovery is underway, folks across the country who have been thinking about selling will be more inclined to list their home,' said Villacorta.
While regional trends are a key indicator of change, the Clear Capital HDI's granular analysis reports on behaviour market by market. It indicates that major metro markets should continue to see noteworthy variability in price trends over the next three quarters. Seattle is expected to finish the year strong, with growth of 6.9% over the next nine months as it continues to show healthy fundamentals overall with relatively low rates of REO saturation, continued price growth momentum over the winter months tacking onto a solid year of 19% growth and a strong job market.
Meanwhile, Phoenix is expected to cool substantially over the next nine months, when compared to the last year's 26.8% rate of growth. The moderation of growth, expected to be just 4.7% over the next three quarters, represents a likely shift to a more normal rate of growth as buyers adjust to a higher priced market. Yet with total growth in 2013 expected to be 8.2%, Phoenix would still be doing remarkably well, according to the analysis.
No major metro market is expected to see substantial declines over the year, but markets like Cleveland continue to struggle to find their footing. Over the last year, Cleveland has seen prices fall slightly by 0.9%. More concerning, however, is the 6.6 point rise in REO saturation over the last quarter, said Villacorta. As a result, prices are expected to decline 0.8% over the next nine months. While price declines of less than 1% are not alarming, the expected loss highlights the metro's struggle with transition into recovery mode, he added.