Home values in the United States have reached a bottom, recording their first annual increase in almost five years.
The latest Zillow Home Value Index rose on an annual basis for the first time since 2007, increasing 0.2% year on year and values have now risen for four consecutive months.
Nearly one third of metros, or 53 of the 167 covered by the Real Estate Market Reports, posted annual increases in home values.
The largest increase was in Phoenix, where home values are up 12.1% from the second quarter of 2011 to the second quarter of 2012.
Looking ahead, two in five, or 67 of the 156 markets covered by the Zillow Home Value Forecast are expected to see increases in home values over the next year, with the largest increases expected in the Phoenix metro at 9.9% and the Miami metro at 6.1%.
‘After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values,’ said Zillow chief economist Stan Humphries.
‘The housing recovery is holding together despite lower than expected job growth, indicating that it has some organic strength of its own. Of course, there is still some risk as we look down the foreclosure pipeline and see foreclosure starts picking up. This will translate into more homes on the market by the end of the year, but we think demand will rise to absorb that, particularly in markets where there are acute inventory shortages now,’ he explained.
‘Looking forward, we expect home values to remain relatively flat as the market works through a backlog of foreclosures and high rates of negative equity,’ he added.
The report also shows that foreclosures continued to fall, with 5.8 out of every 10,000 homes lost to foreclosure in June. Foreclosures have been declining since January, when 7.9 out of every 10,000 homes were lost to foreclosure.
This number is expected to increase in the future, as foreclosure starts have increased since the completion of the National Foreclosure Settlement.
Foreclosure re-sales also fell, making up 15.6% of all sales in June. Foreclosure re-sales have been falling since February, when they made up 18.8% of all sales.
Meanwhile the latest data from the National Association of Realtors shows that the national median existing home price for all housing types was $189,400 in June, up 7.9% from a year ago. This marks four back to back monthly price increases from a year earlier, which last occurred in February to May of 2006. June’s gain was the strongest since February 2006 when the median price rose 8.7% from a year earlier.
But sales are down. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, declined 5.4% to a seasonally adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million in May, but are 4.5% higher than the 4.18 million unit level in June 2011.
According to Lawrence Yun, NAR chief economist, the bigger story is lower inventory and the recovery in home prices.
‘Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets. The price improvement also results from fewer distressed homes in the sales mix,’ he explained.