Western Region Homes See 3.5 Percent Quarterly Gains

National Mortgage Professional
Clear Capital has released its Home Data Index (HDI) Market Report with data through June 2012. The HDI Market Report uses a broad array of public and proprietary data sources providing the most timely and relevant analysis available. Highlights of Clear Capital's Home Data Index (HDI) Market Report include:

►June saw further support for a housing price recovery in sustained momentum with broad-based advances.

►The nation’s home prices rebounded with quarterly and yearly gains of 1.7 percent.

►Regional performance improved across the board.

►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 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 Dr. 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."

“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 said. “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.”

Quarterly home values in June made all-around improvements, a continuation of the positive momentum seen in May. National quarterly gains of 1.7 percent came in 1.3 percentage points stronger than the May HDI Market Report, and the nation’s performance was echoed at the regional levels.

The West made the largest contribution to national trends, with quarter-over-quarter growth of 3.5 percent, an increase of 0.8 percentage points over last month’s report. 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. 

Over the last quarter, low tier gains came in at 3.6 percent (sales less than $140,000), mid tier gains were 3.1 percent (homes selling between $140,000 and $347,000), and top tier gains registered at 3.2 percent (sales higher than $347,000). So far, the West is the only region to see appreciation across all price tiers. As a result, the West widened the gap in June, and is now two percentage points ahead of the South, the next closest region.

The South continued to see growth in June of 1.5 percent over the quarter, and the trend strengthened slightly over May’s rate of expansion of 1.2 percent. Meanwhile the quarterly performance in the Northeast doubled over the previous month, extending gains by 0.8 percent in June.

The Midwest’s quarterly home prices saw the largest jump over the previous month, posting growth of 1.2 percent. When compared to May’s quarterly losses of two percent, 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-over-quarter basis.

Typical for a market in the early stages of recovery, low tier sales in the Midwest (sales less than $101,000) saw the biggest quarterly gains of 2.2 percent, nearly a four-percentage point advance over last 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 percent and 0.4 percent, respectively.

National home prices appreciated by 1.7 percent over the previous year, picking up notable momentum over last month’s marginal gains of 0.1 percent. The progress is expected to extend over the second half of 2012, with additional growth of 2.5 percent forecasted through 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 percent. The superior performance, fueled by expanded gains across price tiers, is expected to continue through 2012 with an additional 5.75 percent growth over the next two quarters.

Meanwhile, Northeast home prices tacked on 2.3 percent 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 percent through the end of 2012.

The South saw prices inflate 1.5 percent over the last year, an improvement over the annual growth of 0.9 percent shown in last month’s Market Report. The accelerating trend is expected to continue, with the South forecasted to see home prices notch up another 1.9 percent by year’s end.

The Midwest made improvements in long term price trends, but just missed turning a gain with year-over-year losses of 0.6 percent. Although the region continued to see prices slide, the losses tapered significantly over the previous month’s declines of 3.1 percent. And the correction should continue, with projected gains for the Midwest of 1.1 percent 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.

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