Property prices in the US have shown strong growth in 2012 with one leading index showing growth of 11.5%. The latest figures from the National Association of Realtors show that the national median existing home price for all housing types was $180,800 in December, some 11.5% above December 2011.
This is the 10th consecutive month of year on year price gains recorded by the NAR, which last occurred from August 2005 to May 2006, and is the strongest increase since November 2005 when it jumped 12.9%. For all of 2012, the preliminary median existing home price was $176,600, up 6.3% from $166,100 in 2011, and was the strongest annual price gain since 2005 when the median price rose 12.4%.
The Zillow Home Value Index shows that prices increased by 5.9% in 2012, the largest annual gain since August 2006. The 5.9% annual appreciation rate far exceeded yearly rates of appreciation typically associated with healthy markets. Historically, housing markets can expect annual home value appreciation of roughly 3% on average, according to Zillow research.
Home value appreciation was more widespread last year and of the 30 largest metros covered by the index only Cincinnati and Chicago failed to show annual and quarterly increases in the fourth quarter. Of the 366 total metro areas analyzed, 254, or 69%, registered annual home value gains in 2012 and 278 metros experienced quarter on quarter home value appreciation.
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However, annual home value growth rates varied widely among the nation’s 30 largest metros, underlining the uneven recovery the housing market is experiencing. Growth rates ranged from a high of 22.5% year on year appreciation in Phoenix to a low of 0.2% depreciation in Cincinnati and Chicago – seven of the top 30 metros registered annual home value increases of 10% or more.
Looking ahead, the Zillow Home Value Forecast shows home values increasing by 3.3% in 2013, a yearly appreciation rate more in line with historic norms. ‘We expected 2012 to be a good year for housing, and it delivered in spades. Strong demand paired with limited inventory in many markets helped fuel a robust and often rapid recovery in overall home values, good news for homeowners after years of poor performance. We expect this recovery to continue into 2013, but at a more sustainable pace,’ said Zillow chief economist Stan Humphries.
The NAR data also showed that existing home sales in the US were the highest in five years but eased in December, falling 1% although still well above a year ago. The preliminary annual total for existing home sales in 2012 was 4.65 million, up 9.2% from 4.26 million in 2011. It was the highest volume since 2007 when it reached 5.03 million and the strongest increase since 2004.
NAR chief economist Lawrence Yun said that pent up demand is sustaining the market. ‘Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales. The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013,’ he explained.