Portland Led U.S. in Annual Price Appreciation in 2015, Says FNC

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According to the latest FNC Residential Price Index, U.S. home prices ended in 2015 with a modest increase as homes sales and residential construction continue to show solid growth. Nationwide, home prices rose at a seasonally unadjusted rate of 0.4% from November, or 6.2% since December 2014. On a quarterly basis, home prices were up 0.2% in the fourth quarter.

"Riding on a robust pace of home sales and new housing starts, home prices in 2015 finished strong with year-over-year growth at a 15-month high since October 2014. If judging on a seasonal basis, December's month-over-month increase outpaced the same period of the past three years," said Yanling Mayer, FNC's housing economist and Director of Research.

"Although stock market jitters from tumbling oil prices and concerns of the Chinese economy could overshadow the underlying strength of the U.S. economy, homebuyers will continue to benefit from record low interest rates, rising mortgage credit availability, and the growing strength of the job market," continued Mayer. "Building on the ongoing momentum, 2016 is likely to continue to see solid price growth."

As of December, the proportion of final sales for foreclosed and REO properties comprises 10.9% of all of the total existing homes sales, down from 12.5% a year ago. Sales of foreclosed homes are at the lowest level since December 2007; when the housing recovery began in early 2012, one-in-five homes sales were foreclosure homes.

In the for-sale market, the fourth quarter of 2015 did not follow an expected seasonal uptrend in the asking price discounts. As of January, the medium discount is 4.0%, which barely moved since October 2015.

On month-over-month basis, December's top up-markets:

• Baltimore (2.6%)
• St. Louis (2.6%)
• Las Vegas (2.1%)
• Portland (2.0%)
• Houston (1.7%)

December home prices were up in two-thirds of the markets tracked by the FNC 30-MSA composite index. Baltimore's 2.6% increase followed a modestly up November (1.1%), but the glut of foreclosed homes - currently making 20% of total home sales - could dampen the strength of future price improvement. Baltimore has the nation's largest share of foreclosure sales, along with Chicago, Detroit, and Tampa.

In Florida, home prices continue to make steady gains despite a relatively large number of foreclosure sales. The Midwest remains the nation's weak housing spot, where home prices retreated widely in recent months and continue to be restrained by foreclosed sales and large price markdowns in the for-sale market. The year-over-year growth in the region's six largest MSAs (except Cincinnati) underperforms the national average, some significantly so.

As of December 2015, cities experiencing the largest Year-Over-Year price appreciation:

• Portland (14.2%)
• Denver (13.0%)
• San Francisco (12.6%)
• Las Vegas (11.9%)
• Miami (11.5%)
• Sacramento (11.5%)
• Phoenix (11.2%)
• Cincinnati (10.1%)

In Portland, December marks the 9th consecutive month of double-digit accelerating year-over-year growth. The Denver market likewise shows no signs of slowing down after 11 consecutive months of yearly growth in the double digits. Yearly price appreciation remains negative in Baltimore and Columbus.