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Home prices climb 8.3 percent in a year, CoreLogic reports

WASHINGTON — U.S. home prices in December were 8.3 percent higher than a year earlier, the strongest advance since May 2006, CoreLogic said Tuesday. But the data also show the considerable distance to go before the housing market reaches prerecession peaks.

The December price gain was 0.4 percent compared to November.

CoreLogic said 46 of 50 states registered gains for the year. Arizona has the strongest year-on-year appreciation at 20.2 percent, though prices are down 39.8 percent there from the peak. Nationally, prices are down 26.9 percent from the April 2006 peak.

Mortgage rates near record lows, a dwindling backlog of foreclosures, waning distressed-property activity and a slowly improving job market have all put a wind at housing's back. Low inventories of both existing and new properties also have helped prices. That has given a big stock price lift to those firms who rely on the housing market, among them builders and banks.

In a note to clients published Tuesday, Bank of America Merrill Lynch analyst Michelle Meyer forecasts prices to rise about 5 percent this year, with housing starts up 25 percent.

Meyer said the market still isn't back to normal, with credit availability among the biggest worries. "We anticipate some easing of lending standards this year, but it likely will take time for credit to flow freely again," Meyer said.

The Federal Reserve's senior loan officer survey, released Tuesday, showed lending standards remain tight.

Separately, online residential real estate site Trulia said asking prices were up 5.9 percent year-on-year in January, while rents rose 4.1 percent. According to Trulia, that marks the first time since the recovery began that rent gains have been outpaced by price gains.

According to Jed Kolko, Trulia's chief economist, the slowdown in rent increases is due to more supply rather than less demand.

Service sector

growth slows

Growth at U.S. service companies slowed slightly in January behind weaker new orders and business activity. The Institute for Supply Management said Tuesday that its index of nonmanufacturing activity dipped to 55.2 in January. That's down from 55.7 in December, which was the highest level in nearly a year. Any reading above 50 indicates expansion. The report measures growth in industries that cover 90 percent of the workforce, including retail, construction, health care and financial services.

Associated Press

Home prices climb 8.3 percent in a year, CoreLogic reports 02/05/13 [Last modified: Tuesday, February 5, 2013 9:54pm]
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