OXFORD, MS-- (December 22, 2010) - The FNC Residential Price Index™ (RPI) indicates that the U.S. housing market in recent months has continued to decline even after tax-credit incentives were introduced early in the year.
From May to October, home prices in the 30 major metropolitan cities have fallen 3.1%. Nationwide, prices dropped about 2.5%. October, declining 0.9% since September, marks the fifth consecutive month in which the FNC 30-MSA composite index has trended lower.
More importantly, October home prices have dropped below the recent market low attained in February during the temporary tax-induced rebound. October now replaces February as the new low, meaning the market continues to search for the bottom of the current housing cycle.
Top housing markets in Orlando, Washington D.C., and Cincinnati show the largest price declines since September at rates of 4.1%, 3.6%, and 3.5% respectively, followed by Columbus and Tampa at 2.6%, Atlanta at 2.5%, and New York at 2.2%. October home prices rose in Baltimore and Detroit by 2.9% and 1.9% respectively.
One exception among top markets is Detroit, which has experienced robust growth in recent months. Home prices there have risen for three straight months for a total of 5.3%. The extended recovery that began in early 2010 has also sent October prices slightly above the 2009 level. In other words, the Detroit single-family housing market has seen positive year-over-year growth for the first time since October 2005 -- the beginning of the city's extended housing slump, driven fundamentally by its deteriorating auto manufacturing industry. In fact, given that this market had been declining during the great U.S. housing boom (at inflation-adjusted annual rate of -2.3% between January 2003 and July 2006), recent signs of persistent improvement are particularly encouraging. With the U.S. auto industry emerging from its worst downturn in history and showing modest recovery in 2010, it is not surprising that the Detroit housing market is going along for a nice ride and has so far seen home prices rise 6.5% since the beginning of 2010.
In light of current housing market conditions, home prices are expected to continue to decline modestly in the months ahead. Also, considering the typical seasonally low housing demand in the coming months, combined with a new flood of foreclosed homes as major lenders resume their normal foreclosure process, the worst of the post-tax-credit housing setback might not be over.
About FNC Inc.Since 1999, FNC has pioneered real estate information technology, automated appraisal ordering, tracking, documentation and review for lender and servicer compliance with government regulations. FNC's platforms are in production at seven of the 10 largest U.S. mortgage lenders and provide value to large and small lenders with reduced costs and more efficient loan processing. With collateral management platforms, data and analytics, FNC provides advanced insight into the property backing a loan from origination to capital markets. Visit FNC online at www.fncinc.com.
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