The West of the US is leading the way in the residential real estate recovery with the Midwest showing signs of stability and growth, according to the latest home price index from Clear Capital.
June saw further support for a housing price recovery in sustained momentum with broad based advances as the nation’s home prices rebounded with quarterly and yearly gains of 1.7%.
Regional performance improved across the board. The West led the regions in price recovery and forecasted growth and the Midwest gained ground, recovering from the persistent price declines over the last year.
The company is forecasting continued growth for the nation, regions, and a majority of the top MSAs in 2012.
‘June home price trends provided further evidence that housing has turned the corner, with the momentum of the recovery picking up speed. Prices continue to climb at the national level, with each of the four regions showing improvements over last month,’ said Alex Villacorta, director of research and analytics at Clear Capital.
‘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,’ he explained.
‘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.
‘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,’ he added.
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.
The South continued to see growth in June of 1.5% over the quarter, and the trend strengthened slightly over May’s rate of expansion of 1.2%. Meanwhile the quarterly performance in the Northeast doubled over the previous month, extending gains by 0.8% in June.
The Midwest’s quarterly home prices saw the largest jump over the previous month, posting growth of 1.2%. When compared to May’s quarterly losses of 2.0%, 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 on quarter basis.
National home prices appreciated by 1.7% over the previous year, picking up notable momentum over last month’s marginal gains of 0.1%. The progress is expected to extend over the second half of 2012, with additional growth of 2.5% 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%. The superior performance, fuelled by expanded gains across price tiers, is expected to continue through 2012 with an additional 5.75% growth over the next two quarters.