National home prices fell by the smallest margin in 10 months in light of REO saturation increases, a trend that Clear Capital calls "unusual and encouraging."
Prices declined 1.9% year-over-year, according to the firm's Home Data Index market report. Short-term prices remained stable, falling only 0.6% quarter-over-quarter, highlighting short-term stability over the last few months.
All regions showed improvements in yearly and quarterly price drops, while three out of four saw upticks in real estate-owned properties for sale.
Clear Capital found that the nation's top 15 peforming metropolitan statistical areas were resilient against higher REO saturation, with six of them showing quartely price appreciation greater than 2%. Quarterly losses among the lowest MSAs eased in February, averaging 4.1% against an average loss of 4.7% in January.
“With this uptick in REO activity, we’ll be keeping a very close eye on the effects of the attorneys general settlement with servicers, as it could dramatically change the flow of REO properties moving through the foreclosure process and significantly impact values in the near future," Alex Villacorta, Clear Capital's director of research and analytics, said.
In a recent HousingWire webinar, Villacorta said markets such as Atlanta and Tucson, Ariz., hit hard by the foreclosure epidemic, are filled to the brim with REO properties for sale and will see a falloff in 2013 — if not before then.
"However, on the broader national level, I don't see that happening," he added.
Home values fell annually in all regions, with the Midwest feeling the largest hit as prices fell 4.3%. Detroit's ailing housing economy shepherded the Midwest's descent while the region fights hard against higher unemployment and REO saturation than the rest of the nation.
The West posted a relatively high level of year-over-year price depreciation at 3.2%. The Northeast experienced small 0.5% annual growth, along with low REO saturation. And home prices in the South varied little with a 0.8% decline.
Villacorta cited improvements in the job market, stronger consumer confidence and the heightened activity of investors with cash as putting upward pressure on prices and adding to the resiliency in prices against the nation's REO bulk.