Analysis by Altos Research shows that home prices in most major U.S. cities have broken free of the downward spiral. The company’s 10-city composite index was up 0.2 percent in May – the first monthly increase recorded by Altos in nine months.
Another positive, Altos says readings of weekly price changes have continued to show modest seasonal increases for the past seven weeks, indicating that traditional home price metrics will soon show increases as well.
Altos’ 10-city composite is based on prices of single family homes in Boston, Chicago, New York, Los Angeles, San Diego, San Francisco, Miami, Las Vegas, Washington D.C, and Denver. But the company analyzes pricing trends across a larger pool of 26 major markets.
Asking prices last month rose in 18 of those 26 markets, Altos reports. San Francisco experienced the sharpest increase, with prices rising 2.4 percent, followed by Dallas and Washington, D.C. with increases of 1.4 percent and 1.2 percent respectively. The Washington, D.C. market also saw the largest jump over the most recent three-month period, with an increase of 6.2 percent.
The largest single-month and three-month declines occurred in Miami with prices falling 1.7 percent during May and 4.4 percent during the past three months. Prices were also down last month in Phoenix
During May, the inventory of properties listed for sale rose by 2.6 percent across Altos’ 10-city composite markets. The increase was more pronounced over the past three months, which produced a 12.4 percent rise in inventory.
For-sale property counts increased in 22 of the 26 markets studied and declined in just four: Detroit, Miami, Dallas, and Minneapolis.
Altos says nationally, inventory is 10 percent lower than this time in 2009, but has been growing rapidly through the spring months. The housing supply increased at the fastest rate in Boston and San Francisco, up 5.9 percent and 5.5 percent respectively during May.
Inventory fell most sharply in the weak Detroit market, with listed properties dropping 3.7 percent in May.
The company notes in its report that market dynamics have been heavily influenced by the Federal Reserve’s mortgage-backed securities (MBS) purchase program which kept mortgage rates historically low and by the federal government’s home buyer tax credit.
The Federal Reserve program officially ended on March 31 and the tax credit will only apply to homes purchased through the end of April.
“The big question is the extent to which these programs may have pulled forward housing demand and how sharply demand could fall off with their expiration,” Altos said.