SOURCE: FNC Inc.

FNC Inc.

April 21, 2011 15:37 ET

FNC Index: Home Price Declines Better Than Expected in February

OXFORD, MS--(Marketwire - Apr 21, 2011) - FNC announced Thursday that U.S. home prices weakened only slightly in February -- a better-than-expected price seasonality.

Based on the latest data on non-distressed home sales (existing and new homes), FNC's Residential Price Index™ (1) (RPI) indicated that home prices in February declined 0.7% from January, or 5.3% from a year ago.(2) Contrary to expectations of relatively rapid price deteriorations, February delivered instead the slowest one-month price declines since November. Even so, the trend shows that weak housing demand and spillovers from rising distressed sales continue to affect the mortgage market.

FNC's RPI -- the industry's first hedonic price index built on a comprehensive database blending public records with real-time appraisals -- also showed home prices nationwide are currently 1.9% below the end of 2010 and comparable to May 2003 on a cyclical basis.

All three composite price indices (the national, the 30-MSA, and the 10-MSA indices) showed relatively flat one-month price changes, ranging from -0.7% by the national composite to +0.3% by the 10-MSA composite. Compared to the previous three months, February is seeing improved trends relative to the pace at which home prices are weakening. Within the 30-MSA composite index, home prices declined in 21 markets at an average rate of 1.6%. In comparison, among the 26 MSAs that showed falling prices in January, the average rate of decline was about 2.4%.

Normally, home prices in February tend to exhibit relatively large seasonal price movement. The better-than-expected February price seasonality could likely send early signals that the housing market is ready for a gradual rebound as a seasonal uptrend in spring home buying typically occurs. The latest published data on existing home sales shows that sales of existing homes are increasing modestly. The latest data on foreclosure price discounts also reveal improving trends in price discounts on distressed homes sales.

Not all markets showed improving trends. Conditions in several major housing markets continue to drive prices lower -- home prices in St. Louis, Atlanta, Tampa, Charlotte, and Orlando have lost 5.0% or more value since the start of 2011. San Antonio, Minneapolis, Washington D.C., and Phoenix also showed modest two-month cumulative declines of 4.0%, 3.8%, 3.8%, and 3.6%, respectively. Meanwhile, Boston, Cleveland, Denver, Detroit, Nashville, and Pittsburgh made small to modest gains in the last two months, ranging from 0.2% in Boston to 2.3% in Pittsburgh.

Home prices continue to fall in double digits below the levels seen a year ago in Phoenix (15.7%), Atlanta (14.1%), Orlando (13.5%), Sacramento (11.3%), Portland (11.2%), Las Vegas (11%), Charlotte (11%), and Chicago (10.3%), followed by high single-digit declines in Tampa (9.8%), St. Louis (9.4%), Minneapolis (8.1%), San Antonio (7.7%), and Miami (7.1%). In particular, the steady declines in recent months in St. Louis and San Antonio came after the two markets displayed rather robust home prices, despite the 2007 housing collapse. Home prices in St. Louis rose 7.7% from July 2007 to July 2010; San Antonio measured a 7.0% price gain from July 2006 to July 2010. In contrast, the 30-MSA composite showed a 29.5% decline between July 2006 and July 2010 and a 28.8% decline between July 2007 and July 2010.

Of the markets tracked by the FNC 30-MSA Composite Price Index, only Detroit and Los Angeles show positive year-over-year price growth since January 2011 -- 2.9% in Detroit and 1.2% in Los Angeles. While markets including Denver, San Diego, and San Francisco showed extended year-over-year growth as recent as October/November, recovery in these markets -- driven by the homebuyer tax credits -- has largely faltered in recent months and home prices are approaching new cyclical lows.

The near-term outlook for the housing market largely remains subdued. Within the housing sector, continued price dampening from rising distressed sales are expected, although the upside it brings is excess inventory reduction as well as improved consumer perceptions and confidence about the market returning to normalcy, all of which are ingredients for a more sustainable recovery ahead. Meanwhile, demand for housing is expected to remain weak. Continued high unemployment and uncertainty about the labor market prospects amid a marked slowdown in overall economic activities will continue to keep many potential homebuyers from investing in homes.

About FNC, Inc.: FNC pioneered real estate collateral information technology. Since 1999, FNC has offered solutions that automate appraisal ordering, tracking, documentation and review for lender compliance with government regulations. FNC's lender clients have realized reduced costs and more efficient loan processing. With its collateral management platforms and collateral-focused data and analytics, FNC provides advanced insight into the property backing a loan from origination to capital markets. No one understands real estate collateral better than FNC. Visit FNC online at www.fncinc.com.


(1) The FNC National Residential Price Index is a volume-weighted aggregate price index consisting of 100 major metropolitan areas across different regions of the U.S. All FNC Residential Price Indices are constructed to capture unsmoothed home price trends in the non-distressed housing sector.

(2) The January price index is slightly revised upward, but the size of the revision is insignificant. Small upward revisions are also made to all other composite indices including the FNC 10-, 20-, and 30-MSA Composite Residential Price Indices.

Contact Information

  • To interview any of FNC's mortgage industry experts, contact:

    Bill Dabney
    Manager of public relations
    FNC, Inc.
    Phone 662/236.8304
    Email Contact