Ahead of Sluggish Recovery, House Prices Show 0.3% Annual Growth: FirstAm
Prices ticked up 0.3% in February compared to one year earlier, marking the first annual increase in more than three years, according to the First American CoreLogic LoanPerformance house price index (HPI). Despite the slight gain over last year, the expiration of federal stimulus programs looks likely to drag down the fragile recovery seen so far in the housing sector, First American said. Annual price declines were concentrated in western states, with Idaho falling the sharpest -- down 13.7% -- from last year. Nevada followed with the second-highest -- 12.9% -- decline from last year: February marked an improvement over January's 0.5% yearly price decline. The yearly appreciation in prices doubled to 0.6% in First American's February non-distressed HPI, which measures price changes excluding distressed sales. The national average house price fell 2% from January, First American said, although seasonal weakness may account for the one-month change. “February’s year-over-year increase in the HPI breaks through an important psychological barrier,” said Mark Fleming, chief economist for First American CoreLogic. “While the increase in the HPI is encouraging, expectations for increased inventory as federal housing stimulus expires moderates our forecast for 2010. Prices will continue to bounce along the bottom while inventory levels remain elevated.” The company's forecasts for the inventory of homes for sale rose as interest rates are expected to rise, tax credits are set to expire and lingering winter weather continues to drag on February prices. The forecast illustrates what First American called a "sluggish" recovery. After an expected "modest" growth in spring and summer, the national single-family combined HPI is forecast by First American to decline by 3.4% from February 2010 to February 2011. The company based this expectation on the expiration of current federal housing stimulus programs, including the first-time homebuyer tax credit. Write to Diana Golobay.