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Home Prices Improve at Fastest Rate Since 2006, Driven by Western States

Rapidly rising home prices were confirmed by another report this morning, this one from CoreLogic. Its Home Price Index (HPI) jumped 10.2 percent on an annual basis in February, the biggest year-over-year increase since March 2006 and the 12thconsecutive month that home prices have risen nationally. The HPI, which includes sales of distressed properties, also increased on a monthly basis, rising 0.5 percent from January to February 2013. When sales of lender-owned real estate (REO) and short-sales are excluded from the calculations home prices increased by 10.1 percent on an annual basis and 1.5 percent from January to February.
CoreLogic's Pending HPI for March indicates another 10.2 percent increase from March 2012 and a 1.2 percent increase from January to February. Excluding distressed sales, March 2013 home prices are poised to rise 11.4 percent year over year from March 2012 and by 2.0 percent month over month from February 2013. The Pending HPI is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

The states with the greatest home appreciation including distressed sales were Nevada (+19.3 percent), Arizona (18.6 percent), California (15.3 percent), Hawaii (14.6 percent) and Idaho (13.5 percent). When distressed sales are excluded the same five states lead in prices increases with only slight changes in the order and number; Nevada (18.3 percent), Arizona (16.4 percent), Hawaii (15.5 percent), California (15.3 percent) and Idaho (15.3 percent).

Delaware was the only state to post a decrease in home values on both the HPI including distressed sales (4.4 percent) and the HPI excluding them (1.9 percent) but Alabama (1.5 percent) and Illinois (-1.0 percent) also showed price depreciation when distressed sales were included.

Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to February 2013) was -26.3 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -19.3 percent. Even with the recent price increases Nevada is still down from its peak price level by 50.8 percent when distressed sales are included followed by Florida at 43.3 percent. Other states with peak-to-current price depreciation exceeding 35 percent are Michigan, Arizona, and Rhode Island.

"The rebound in prices is heavily driven by western states. Eight of the top ten highest appreciating large markets are in California, with Phoenix and Las Vegas rounding out the list," said Dr. Mark Fleming, chief economist for CoreLogic.

"Home prices continued their march upward in February. Nationally, home prices improved at the best rate since mid-2006, marking a full year of annual increases and underscoring the ongoing strengthening of market fundamentals," said Anand Nallathambi, president and CEO of CoreLogic. "Continued home price appreciation will provide fuel needed to drive further recovery in the home purchase market."

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