Declining foreclosure activity and strengthening home sales contributed positively to home prices in October, with FNC’s latest Residential Price Index increasing 3.7 percent year-over-year for the month.
In addition, the Residential Price Index was up 0.4 percent from September to October – the eighth consecutive month of such increases – and year-to-date, the index has appreciated by 5.1 percent, as rising homeowner expectations continue to drive higher listing prices and smaller listing price discounts.
Residential Price Index Positive in October
Other details that FNC noted in its Residential Price Index report included:
- Foreclosures as a percentage of total home sales were 17.6 percent in October, which is down from 26.7 percent in January 2012 and 23.5 percent in October 2011.
- Since turning positive on a year-over-year basis for the first time in July, the Residential Price Index has grown stronger with each successive month, increasing 1.4 percent in August, 2.5 percent in September and 3.7 percent in October.
- Here in Chicago, the Residential Price Index increased 1.9 percent on a monthly basis in October, which was good for the fifth best monthly increase in the nation. Additionally, home prices rose 2.5 percent year-to-date; year-over-year, though, home prices continued to struggle in Chicago, falling 1.4 percent.
- That is fairly consistent with the latest information from the Illinois Association of Realtors, which found home prices in Chicago rose 2.1 percent from September to October, the market’s best showing since 2006. The latest data from IAR, which is due out on Thursday, will have information about November.
Good Sign for Home Prices in 2013?
The increasingly strong yearly gains for the Residential Price Index, as Bill McBride noted on his Calculated Risk blog, mean good things for housing prices, and they have many looking forward to 2013.
The Wall Street Journal recently reported that analysts at J.P. Morgan Chase has dramatically revised upward their 2013 expectations of home prices. Previously, the bank’s researchers expected home prices to rise at least 1.5 percent in 2013, but now that demand for homes is at its highest level since 2006, the bank is confidently upgrading its predictions.
By how much? Now, J.P. Morgan expects home prices to increase at least 3.4 percent – and, in its most bullish prediction, by an impressive 9.7 percent. And as the Journal points out, it’s certainly not alone; Standard & Poor’s, which releases the epochal Case-Shiller Home Price Indices every month, is expecting a 5 percent increase in 2013.