Clear Capital released its Home Data Index (HDI) Market Report with data through August. Top metro markets continued to advance over both the rolling quarter and year. While each of the highest performing 15 metros saw quarterly gains over 4 percent, seven markets posted double digit yearly gains. On average, 9.2 percent in yearly gains were supported by short-term average quarterly gains of 6.6 percent. On both counts, progress continues to be made by the strongest metros.

Report highlights include:

• National price gains strengthened, marking the fourth consecutive month of yearly gains.

• Breaking a cycle of growth through 2012, National REO saturation declined over the quarter to levels not seen since April 2008.

• Fair market prices outpaced REO prices over the last rolling quarter for the first time since April 2011, signaling the start to a more mature recovery.

“Home price trends in August remained positive, posting the fourth consecutive yearly gain,” said Alex Villacorta, director of research and analytics at Clear Capital. “This month, three notable trends shifted: Growth in the fair market segment outpaced the REO segment over the last rolling quarter; through the first half of 2012, REO saturation was on the rise while August saw a drop to the lowest levels since 2008; and non-investor homebuyers made up a larger chunk of the sales mix. The spark from the investor community has ignited activity in the owner-occupied sector of the market. In other words, historical market forces are at play.

"The shift could certainly have far reaching effects, even on smaller markets like San Bernardino County, where they are considering the use of eminent domain to relieve underwater borrowers. A comparison of price trends in San Bernardino County and Maricopa County, part of the Phoenix MSA, suggests eminent domain may be unnecessary. Phoenix has become the benchmark for recovering markets over the last year, which sheds light on where an organic trajectory of the San Bernardino market could be headed.”

Rolling quarter results

National gains of 1.9 percent on a rolling quarterly basis left momentum nearly unchanged at the broad market level, when compared to last month’s quarterly gains of 2 percent. A more notable shift occurred in the national REO saturation rate, where a decline of 6.4 percentage points over the previous quarter dropped the current rate down to a relatively low 20.5 percent. This is the first decline in 2012 and the lowest national REO saturation rate since April 2008 (16.3 percent), reflecting a 49 percent reduction from the peak REO saturation rate of 40.2 percent seen in Q1 2009. REO saturation declined as a result of declines in REO sale volumes and increases in fair market sale volumes. While the impetus of Phase One of the recovery was strength in REO-only price trends as REO saturation rose, August gains were driven by the fair market segment as REO saturation declined. Sustained growth in the fair market segment could build a foundation for Phase Two of the recovery.

All four regions posted rolling quarterly gains, as the West continued its strong recovery with 3.8 percent growth. The Midwest, South and Northeast each trailed with 2 percent, 1.5 percent and 0.5 percent price increases, respectively. Following the trends at the national level, each region recorded reduced REO saturation rates over the quarter.

Year-over-year results

National home prices edged up 2.9 percent over the last year, marking the fourth consecutive month of yearly gains. The overall market continued to strengthen its position in August, with rates of growth outpacing those in July by 0.7 percentage points. Continued growth on this non-seasonally influenced metric shows fundamental strength fueling gains, rather than a boost from the summer buying season.

Each of the four regions tacked on annual gains in August, as well. The West took the biggest step forward in expanding prices over the year by 7.7 percent and had the most notable regional momentum of 1.5 percentage points over July. The South and Northeast trailed the West with yearly gains of 2.5 percent and 1.3 percent, respectively. The Midwest made some progress over the last year, with prices up 0.5 percent, the first gain on a yearly basis for the region since April 2010.