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Winter Season Slows Home Price Gains

National home prices continued to post strong yearly gains in January as lower-priced homes drove activity in the housing market, according to a report from ""Clear Capital"":http://www.clearcapital.com/. At the same time, prices showed signs of weakening on a quarterly basis.


On a national level, January home prices increased 5.4 percent from a year ago, but inched up by just 0.9 percent on a quarterly basis, the data provider reported.

Out of the four regions, the West maintained its lead with yearly gains and quarterly gains of 12.9 percent and 2.1 percent, respectively. As prices rise and REO saturation decreases (the portion of REO sales relative to total sales), Clear Capital expects price trends to moderate. Over the years, REO saturation has fallen in the West from the peak of 52.5 percent in March 2009 to 17.2 percent.

The remaining regions all saw yearly gains, with the South experiencing a 4.5 percent improvement in prices, followed by 2.7 percent in the Midwest and 2.4 percent in the Northeast. However, prices were flat on a quarterly basis in the three regions: South (+0.7 percent), Northeast (+0.6 percent), and Midwest (+0.2 percent).

Dr. Alex Villacorta, director of research and analytics at Clear Capital, explained the softened quarterly gains suggest ""the budding recovery is not immune to the slower winter season.""


""What remains to be seen is if home prices will continue to rise, or remain stable through the winter. Regardless of what trends play out in the near term, we expect home prices to continue on a positive trajectory long term,"" he added.

Clear Capital pointed to the low tier priced segment as the ""main driving force in markets across the U.S.,"" more specifically, homes that sell for $102,000 and less. According to the report, many of these lower-priced homes are REOs, which are attractive to both investors and buyers.

""REO sales continue to make an impact on the overall health and recovery of the housing market,"" the data provided stated.

On a national level, the REO saturation rate has fallen from the March 2009 peak of 41 percent to 18.4 percent in January.

After measuring price trends in metro areas, Clear Capital noted one surprising occurrence-no Florida metros made the top 15 list for price growth.

""On a more micro level, Florida metros, namely Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list,"" said Villacorta. ""While this isn't confirmation that the recovery is finished in the sunshine state, it's certainly something to keep an eye on.""

On average, metros on the top 15 list registered yearly gains of 13.4 percent, well above the national average, but reported quarterly gains under 5 percent. Six of the top 15 metros were in California.

*Top Five Markets*
_(Based on quarterly gains)_

# Atlanta (+3.2 percent)
# Phoenix (+3.0 percent)
# San Jose (3.0 percent)
# Las Vegas (2.9 percent)
# Birmingham (+2.7 percent)

About Author: Esther Cho


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