Clear Capital released its Home Data Index (HDI) Market Report with data through March 2012. Report highlights include:

• National home values dropped slightly in the rolling quarter-over-quarter analysis.

• Regions posted mild quarterly gains, except the struggling Midwest, which continued its downward slide.

• The year-over-year numbers showed weaker performance for the nation and the regions, indicating the short-term relief has yet to be enough to turn the long-term tide.  

• Forecast for rest of 2012 shows mild increases building up to a stronger 1.2 percent by year end.

“With the exception of the Midwest, positive growth in rolling quarter-over-quarter prices is an encouraging sign that markets are rebounding from the winter slow down earlier than usual,” said Alex Villacorta, director of research and analytics at Clear Capital. “Even with the relatively modest declines seen over the last few months, markets have continued to show signs of bottoming out. The projections we made at the beginning of the year are playing out and we expect to see the nation gain just over 1 percent through the year’s end.  

“We are continuing to see, overall short term home value strength against the rising REO saturation.” Villacorta added. “This is an indication of market stability, and bodes well for the continued growth we’re expecting over the rest of the year.”

Quarter-over-quarter results: Is no news good news?

The nation held fast over the most recent quarter, and for the fifth time in six months, saw price changes of less than 1 percent. While the US lost -0.2 percent quarter over quarter, this decline is milder than last month’s decline of -0.6 percent. This positive trend may be attributed to the beginning of spring after a very mild winter, resulting in the start of an early buying season. 

In looking at the quarter-over-quarter performance through March, the typically weak Western region squeezed out a minor 0.1 percent gain in prices over the quarter, which is a healthy improvement of over last month’s losses of -0.4 percent and shows long awaited upward momentum in the region that posted losses over the past five months. The embattled Midwest region, hit hard over the past three months, continued sliding this month losing -2.4 percent, and it was the only region to post losses in the quarter or mark any quarterly price movement more than 2 percent. This result shows how the stability seen by the rest of the nation has yet to embrace the region.

The stable Northeast held true to form and turned in a modest 0.3 percent increase in prices, which was a 0.4 percentage point improvement over the quarterly loss of -0.1 percent posted last month.

The South turned in the strongest short-term gains across the nation, with prices climbing up by 0.6 percent, due in part to impressive results in Florida, Texas and Virginia, all of which are well represented in the best performing MSAs listed later in the report. This gain was a healthy 0.8 percentage point improvement over the loss of -0.2 percent posted last month.

Year-over-year prices: Nation and regions catching up to short-term gains

The year-over-year analysis found the nation lost -1.4 percent over the period, which is slightly better than February’s year-over-year results of -1.9 percent, indicating a positive trend in yearly numbers. 

The yearly numbers across all regions show more significant losses than the quarter-over-quarter numbers, which indicates the nation has possibly hit the bottom of a pricing valley, with long-term prices starting to reflect the short-term strength. This effect could be in play as all of the regions’ yearly numbers, while still weak, are better than February’s results. The consistent theme for the yearly numbers is that all regions are showing losses, with the Northeast posting a small gain. This is similar to the condition seen over the past six months.  

Interesting trends in REO saturation

For the second month in a row there have been increases in REO saturation for the nation and the regions, helping to confirm speculation the attorneys general settlement has empowered the affected servicers to become more aggressive in moving their REO backlog onto the housing market.

In March, the national REO rate went up 1.2 points since last month and 1.8 points over the past quarter to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points over the quarter to 34.3 percent, with the other regions all seeing softer increases.

Of particular interest this month is how these changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not this month.