The housing market has been taking significant steps forward in recent months and rising home prices continued through the end of May.
On a national basis, prices grew 1.3 percent over the previous three months through the end of May, according to the latest Home Data Index Market Report from analysis firm Clear Capital. However, on an annual basis, prices are up 8.2 percent — a significant improvement from the 7.2 percent annual improvement observed in April.
The national increase on a quarterly basis was largely driven by the fact that home price improvements of varying levels were observed in each of the nation’s four regions, the report said. The largest of these was the 2.4 percent climb for the West, while the South’s came in at 1.1 percent. More modest steps forward during the three-month period came in the Northeast and Midwest, where they climbed 0.8 and 0.7 percent, respectively.
“National price trends are at a relatively healthy point and the diversity in price performance at the local level is mainly a function of the severity to which a particular housing market was hit during the housing crash. In general, we expect current gains to moderate over the near term,” said Alex Villacorta, vice president of research and analytics at Clear Capital. “Certainly the expectation for moderation is less flashy than home prices racing their way back to pre-crisis levels. Yet moderation provides a sense of stability that is essential for both consumers and lenders, as it allows for both parties to calibrate to the current housing landscape.”
On a more granular level, though, most of the nation’s top 30 cities experienced gains on both quarterly and annual bases, the report said. Cleveland, St. Louis and Raleigh were the only areas where there were declines in home prices over both three- and 12-month periods. Meanwhile, Las Vegas, one of the cities hardest-hit by the housing downturn, saw them rise 4.5 and 27 percent from the previous quarter and year, respectively.
There is some concern within the housing industry that rising prices combined with recent spikes in interest rates will necessarily drive more potential buyers away as affordability drops. However, experts generally believe that demand for property is currently so pent-up by the restricted inventory currently available that jumps in both respects will have to be more appreciable to really discourage sales.