First American: House Prices May Bottom in March
First American CoreLogic projects continued short-term declines through winter, followed by price improvements in the spring. The firm projects the country’s 45 largest markets will decline an additional 4.2%, driven by a surge in foreclosure resales hitting the market. But a decline in unemployment and improvement in inventory levels will help prices bottom out in March 2010 and prices will experience a 1% year-over-year appreciation by October 2010. The metropolitan statistical areas (MSAs) with the largest projected declines during the next six months include Detroit (12.7%), Warren-Troy-Farmington Hills, Mich. (11.4%), and Cleveland (6.3%). MSAs projected to see the strongest improvements during the next six months are all in California — San Francisco (5.7%), Los Angeles (5%), San Diego (4.7%) and Sacramento (4.6%). “We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April,” said First American CoreLogic chief economist Mark Fleming. “The additional government support for the housing market has stimulated demand and restricted supply in 2009. How these government supports are removed in 2010 and the moderation of pending inventory and negative equity will be critical to the continued stability of the housing market,” he said. National home prices declined 7.8% year-over-year in October, according the firm’s home price index. The decline is less than the 9.5% year-over-year decrease in September. Month-over-month, prices declined 0.7% between September and October. Excluding distressed sales, year-over-year prices declined 5.8% in October, an improvement from the 6.3% year-over-year decline in September. The national HPI is 30.1% below its April 2006 peak. Excluding distressed sales, it’s down 21.5%. Nevada experienced the greatest year-over-year price decline at 24.3% in October, followed by Arizona (17.3%), Florida (15.5%), Michigan (13.9%) and Idaho (12.1%). Excluding distressed sales, Nevada is still the worst performing state, with a 20.2% year-over-year decline in October. Arizona (14.7%), Florida (13.7%), West Virginia (10.4%) and Washington (9.4%) round out the top five worst performing states. Write to Austin Kilgore.