The housing market continued to steadily improve in February, with home prices increasing and foreclosures falling, DataQuick revealed in a new report. But risks still remain, the research firm suggested.
The hardest-hit markets — Arizona, California, Florida and Nevada — saw a rebound in home prices that the rest of the country has yet to experience. In these hardest-hit markets, their combined home price growth rose more than 10% from last year, while growth in other market hovered around 2.5%.
"The increase in home price growth was positive in 34 of the 42 counties we highlight in every monthly PIR over the last month and quarter; revealing that the markets continue to rise toward a certain stabilization despite looming economic factors," said Gordon Crawford, vice president of Analytics for DataQuick.
Crawford adds, "Recent home price growth rates, however, might be overcompensating for an overcorrecting decline in home prices during the downturn. As a result, we expect the growth rates in these markets to slow to a level that is more in line with the rest of the country’s home price growth."
While the housing outlook in February looks positive, it is uncertain as to whether these improvements will continue through 2013.
While the unemployment rate dropped to 7.7% in February and the number of housing starts and permits rose, Crawford believes the market is still stabilizing and working to reach more normalized levels.
"Uncertainty factors lead to a difficult time valuing real estate; dampening the activity of both buyers and sellers," said Crawford. "Employment rose by 236,000 jobs in February, and although that is a favorable number, we have seen this in previous years where employment growth is positive, only to decline in later months of the year."
According to Crawford, other factors causing uncertainty include an unsustainable federal deficit and financial issues in the U.S. as well as abroad.