Six States Post New Highs in Home Prices

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Compared with 2013, home prices rose 11.1% in March, marking a 25th consecutive month of year-over-year gains, according to research firm CoreLogic. Home prices in five states — Colorado, North Dakota, South Dakota, Texas and Wyoming — and the District of Columbia posted peak prices in March, even including distressed sales.

Home prices rose 1.4% from February to March. The data include sales of distressed properties, and the index is a non-seasonally adjusted three-month weighted average. Distressed sales include short sales and real-estate owned (REO) transactions.

Excluding distressed sales, March prices rose 0.9% compared with February. Home prices remain 16% below their April 2006 national peak when distressed sales are counted, and 11.6% below the peak when distressed sales are excluded.

In the month of March, homebuilder stocks fell sharply. Toll Brothers Inc. (NYSE: TOL) posted a monthly decline of about 8% and PulteGroup Inc. (NYSE: PHM) shares fell 8.6%. D.R. Horton Inc. (NYSE: DHI) posted a monthly drop of nearly 12% and KB Home (NYSE: KBH) shares posted a slide of nearly 17%. For a variety of possible reasons — bad weather, higher interest rates, tighter loan restrictions — home sales are stalled and homebuilders’ stocks are sinking as a result.

CoreLogic expects April housing prices to rise by 0.8% month-over-month. Excluding distressed sales, CoreLogic’s month-over-month estimated increase for April is forecast at 0.6%, and the forecast from March 2014 to March 2015 calls for prices to rise by 5.7%.

The company’s chief economist said:

March data on new and existing home sales was weaker than expected and is a cause for concern as we enter the spring buying season. Interest rate-disenfranchised potential sellers are adding to the existing shadow inventory, while buyers who can’t find what they want to buy are on the sidelines creating a new kind of “shadow demand.” This supply and demand imbalance continues to drive home prices higher, even though transaction volumes are lower than expected.

Including distressed sales, March year-over-year home prices rose the most in California (prices up 17.2%), Nevada (15.5%), Georgia (12.4%), Hawaii (12.3%) and Oregon (12.2%). The five states where home prices remain furthest from their peak values are Nevada (down 39.9%), Florida (36.3%), Arizona (30.3%), Rhode Island (28.1%) and Illinois (26.5%). CoreLogic noted that 23 states and the District of Columbia are now at or within 10% of their home price peaks.

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