There was a time, not long ago, when nary a ray of light could be found in the U.S. housing market. Home prices were eroding, inventory was accumulating, and sales activity was grinding to a halt.
So how’s this for a ray of light: Year over year, home prices have risen in 99 of the 100 largest cities in America — for the second month in a row. This is according to a recent report by CoreLogic, a company that provides property data to the financial industry. It’s the latest evidence of a housing recovery that is spreading across the nation.
Home Prices Rise in 99% of Major Cities
CoreLogic’s Home Price Index (HPI®) report is a repeat-sales index that tracks the ups and downs of sales prices over time. The company monitors home-price trends in 639 core-based statistical areas (cities and metros) across the country, covering 86% of the entire U.S. population. So it’s a good indicator of where the housing market has been, and where it’s headed.
The following trends are from the July 2013 HPI report:
- Home prices across the country rose 12.4% in July, compared to the same month last year.
- The July reading showed that prices have risen, year-over-year, in 99 of the 100 largest U.S. metro areas.
- This marks the 17th month in a row that U.S. home prices have risen in the year-over-year category.
- CoreLogic expects to see annual gains of 12.3%, year-over-year, when the August numbers come in. That would make 18 consecutive months of annual price gains.
Biggest Gains in Nevada, California, Arizona
The three states with the largest annual price gains were among those hardest hit during the housing crisis. Home prices in Nevada rose by 27% from July 2012 to July 2013. During the same period, prices in California and Arizona climbed by 23% and 17%, respectively.
House values in these states plummeted during the crash, leaving millions of homeowners underwater. Now prices are rebounding rapidly, though they are still well below pre-crisis peak levels in most states.
Top 5 States for Annual Price Gains, In July
- Nevada +27%
- California +23.2%
- Arizona +17%
- Wyoming +16.4%
- Oregon +15%
At the city and metro level, California took the top two spots for home-price gains. This comes as no surprise. California’s housing markets, once devastated by the downturn, have been surging over the last couple of years. Atlanta also comes as no surprise, having fallen so far during the crisis. Houston, on the other hand, is somewhat unexpected. Home prices in the Lone Star State remained relatively stable during the crisis, so it’s surprising to find a Texas metro on this list.
Top 5 Metros for Year-Over-Year Price Gains
- Los Angeles – Long Beach – Glendale (+22.62)
- Riverside – San Bernardino – Ontario (+22.53)
- Phoenix – Mesa – Glendal (+18.10)
- Atlanta – Sandy Springs – Marietta (+15.61)
- Houston – Sugar Land – Baytown (+11.13)
The Ups and Downs of Housing Inventory
What’s driving these price gains that are occurring across the country? It’s a supply-and-demand story, as always. In many local housing markets, inventory has declined over the last year. At the same time, demand is growing as a result of job gains and other economic improvements. This means more buyers are competing for fewer properties. Home prices typically rise under such conditions.
But prices are beginning to cool in some of the hottest housing markets across the country. Here again, inventory is playing a key role. Cities that had major inventory losses a few months ago are now seeing inventory gains.
In fact, two of the cities listed above (Riverside and Atlanta) are among those with the largest gains in total listings. It is unlikely these cities can maintain their current level of home-price appreciation alongside such inventory growth.
Six months from now, the “Top 5 Metro” list above could look totally different.