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Boost for US property prices - 14 June 2010

Residential property prices in the US increased 6.8% in May compared with a year ago, the largest annual increase since July 2006, the latest figures to be published show.

The rolling quarter-over-quarter figure, which measures houses prices against those three months ago showed a 1.8% decline, an improvement from the 5% drop in April, the figures from real estate data provider Clear Capital also show.

‘We continue to see sustained price growth throughout much of the country with yearly price gains reflecting the housing recovery off of last year’s lows. In June of last year, we reported a national yearly decline of 19.3%, whereas the present report shows a 6.8% gain,’ said Alex Villacorta, senior statistician at Clear Capital.

‘The expiration of the tax credit at the end of April has certainly contributed to the growth of prices we are observing and as more sales close before the June 30 deadline we expect that markets across the country will continue to see strengthening of prices,’ he added.

May’s improvement is reflected across all four US regions, with the Midwest experiencing the largest jump at 4.5%, bringing its current quarterly price change to -4.9% percent. While quarterly prices remain negative in three of the four regions, yearly gains remained intact.

Prices in Dallas, Texas increased 3.4% from the end of 2009, the highest jump for all markets over the last quarter. The worse performing market in May was Detroit where prices dropped 10.7% from the previous three months, but an improvement from the 14.4% drop seen in the previous month.

The amount of REO (real estate owned) properties on the market seems to be dropping, too, according to Clear Capital. The national REO saturation rate dropped to 27.8%, down from 41.7% last year.

‘This dramatic shift in price trends reflects the unprecedented volatility over the last couple of years and the delicate state of local real estate markets around the country,’ Villacorta explained.

While quarterly prices in three of the four regions remained below levels from three months ago, the 0.3% increase in the West being the only exception, prices should maintain positive momentum heading into the summer, according to the report.

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