An unusually robust rise in home prices from April to May could foreshadow a recovery in many U.S. housing markets, according to a report released on Thursday by Radar Logic, a real estate data and analytics company.
Twenty-two out of 25 metropolitan statistical areas, or MSAs, displayed month-over-month price increases in May, according to Radar Logic's RPX Monthly Housing Market Report for May 2009.
The RPX 25-MSA Composite showed a month-over-month increase of 2.1 percent.
This is in stark contrast to the same period during 2008, when a decrease in the velocity of home price depreciation gave way to the worst loss in housing value in recent history, the report said.
Prices have fallen 33.5 percent peak-to-trough and 31 percent peak-to-current, according to the RPX 25-MSA Composite.
Radar Logic said the RPX is designed to be a daily indication of the spot price for residential real estate, which perhaps provides an early view of trends in the broader economy.
We have been observing strength in the RPX since April, and it now appears that this improvement in home prices was an early indicator of some strength in the general economy, the report said.
San Francisco ranked No. 1 in May, in terms of price gains, prices surging 7.3 percent versus April. Minneapolis and Milwaukee ranked second and third, with prices climbing 5.5 percent and 4.9 percent, respectively, in May versus April, the data showed.
Prices in most of these MSAs increased more than would be expected, given historical seasonal patterns, the report said. This contrasts starkly to the month-over-month price changes in May 2008, when the seasonal strength typically observable in spring and summer was largely absent.
Radar Logic said the larger-than-average increase in home prices from April to May 2009 could indicate that seasonal price fluctuations do not fully account for the strength seen in many areas and that seasonal gains are being augmented by a more general recovery in the housing market.
Unusually mild price declines in the coming autumn and winter would provide further evidence that some markets have started to recover, the report said.
BIG CITY BLUES
Atlanta, Las Vegas and New York -- in contrast to the price growth displayed by most of the MSAs tracked -- declined on a month-over-month basis in May, dropping 0.2 percent, 0.6 percent and 1.7 percent, respectively, the data showed.
Radar Logic said the price declines in New York and Las Vegas were not surprising, due to their economies' reliance on industries that have been hit hard during the recession.
The company also said the absence of seasonal strength in Atlanta was not unusual, either, as seasonal factors do not have a particularly strong influence on the Atlanta RPX relative to the influence of seasonality on other MSAs.
The RPX 25-MSA Composite has increased 3.7 percent since March 30, when it hit its lowest point since the beginning of the housing crisis. Home prices in the western region of the United States have performed particularly well recently, increasing by 6.9 percent since hitting their low on January 22, the report said. (Editing by Jan Paschal)