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National Home Values Continue to Rise, but for how Long?

priceHome values continue to increase across the U.S., with Clear Capital’s December 2015 Home Data Index showing price appreciation of 5.2 percent year-over-year and 0.8 percent when comparing the most recent quarter on record to the previous quarter.

Clear Capital’s most recent HDI Market Index shows most regions across the U.S. in a state of price appreciation, but Alex Villacorta, vice president of research and analytics at Clear Capital, says it’s too early to speculate on whether price appreciation will remain a trend heading into 2016—with the market already facing an interest rate hike from the Fed and economic uncertainty.

“The slow moderation of home prices back to historical rates of growth is the most defining attribute of the market over the year,” Villacorta said. “Although housing continues to stabilize, there is still significant variability in individual market performance. For example, some Midwest markets still have a ways to go to return to their pre-bust levels, while other Western markets are seeing all-time highs. Perspective remains key.”

Clear Capital concludes that the peak real estate season for the year has “come and gone” and national price appreciation fell 0.1 percentage points from the peak buying season, but overall regions are still showing price appreciation, with increases in the West even stoking fears about whether another price bubble is feasible.

The Western region saw prices jump 1.2 percent quarter-over-quarter and 7.5 percent over last year, while the South saw a 0.8 percent quarter-over-quarter increase and a 5.8 percent jump over year ago levels.

Meanwhile, the Midwest reported values that edged up 0.9 percent over the previous quarter and 4.6 percent year-over-year, and the Northeast saw values increase 0.5 percent over the prior quarter and only 2 percent from last year.

While end of the year appreciation is a good sign overall, Clear Capital warned about outside influences that could artificially lift prices.

“Several MSAs reflect an interesting growth phenomenon uncharacteristic for this time of the year,” Villacorta said. “This upward trend is encouraging, but we must remember that gains are as much a function of how low prices have fallen as they are a sign of stabilization and outperformance. Investors and consumers alike could also be pushing upward pressure on demand as they rush to purchase existing inventory at current rates before an anticipated rate hike from the Fed arrives later this month.”

About Author: Kerri Panchuk


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