By Mike Colpitts
In a major positive sign for the U.S. housing market, the two largest real estate research firms tracking the market agree that average home prices have increased for the first time since the real estate collapse more than five years ago.
California based CoreLogic and Florida based Lender Processing Services say home prices rose for two straight months. CoreLogic data shows an increase of home values of 1.1% in April over the prior month. LPS says prices have risen 0.9%.
“In March, our seasonally adjusted HPI increased for a second consecutive month, the first time that has happened since the 2006 market peak,” said Raj Dosaj, vice president of LPS Applied Analytics. “The increase was broad based geographically, with prices up in nearly every MSA that LPS covers nationwide.”
However, home sales in March were near a record low, with volumes not seen since the mid-1990s. The rate of sales increased during April across the U.S., according to the National Association of Realtors. Existing home sales rose 3.4% to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March.
Distress sales, which include foreclosures and short sales made up about 40% of sales in March, LPS said. Despite the improvement, discount priced REOs and short sales drive the market, attracting home buyers.
The company’s consensus that home prices are rising is the first major indication that the majority of U.S cities home values are improving after more than five years in the doldrums. Home prices have dropped as much as 80% since the markets peak in the hardest hit areas of the nation.
There were increases in prices during March among nearly all metropolitan statistical areas (MSAs) that LPS tracks, 578 of the 582. It’s the first time a large majority of MSAs covered by the data had price increases.
Among markets which both LPS and the U.S. Bureau of Labor Statistics provide data, only Los Angeles remained unchanged. Cincinnati, Ohio had a small increase, but the rest of the MSAs increased by more than 0.5%.