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Home Prices Press Forward, Despite State of Financial Markets

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Home prices have been consistently rising for the last few years but they have since lost some of their momentum, proving that economists were spot-on with their predictions of a slower housing market heading into 2016.

In the midst of tight supply, heightened competition for buyers, and unpredictable financial markets, U.S. home prices continued to rise in December.

Black Knight Financial Services' Data and Analytics division released its December 2015 Home Price Index (HPI) report, finding that U.S. home prices rose marginally by 0.1 percent. Year-over-year home prices are still up 5.5 percent.

The HPI reached $253,000 in December 2015 and is now only 5.3 percent off its June 2006 peak of $268,000. In addition, the index is up 27 percent from the housing market’s bottom in January 2012.

New York and Florida led the home price gains among the states in December, both rising 0.8 percent from the previous month. The rest of the top ten states with the largest HPI changes month-over-month included Washington (0.4 percent), South Dakota (0.4 percent), Arizona (0.4 percent), North Dakota (0.4 percent), Wyoming (0.4 percent), Kansas (0.3 percent), Alabama (0.3 percent), and Kentucky (0.3 percent).

In December, Black Knight reported that Connecticut saw the most negative home price appreciation, with home prices declining 0.7 percent from the previous month. Wrapping up the bottom ten states were: Michigan, Louisiana, Wisconsin, Virginia, North Carolina, New Hampshire, Pennsylvania, New Jersey, and Missouri.

Florida metros accounted for all of the top ten highest HPI changes in December including Sarasota (1.4 percent), Punta Gorda (1.3 percent), Port St. Lucie (1.2 percent), Naples (1.2 percent), Cape Coral (1.1 percent), Homosassa Springs (1.1 percent), Sebring (1.1 percent), Panama City (1.0 percent), Lakeland (0.9 percent), and Miami (0.9 percent). Leading the negative end of appreciation were all New Jersey cities (Trenton (-1.1 percent), Atlantic City (-1.0 percent), and Vineland (-0.9 percent).

The data showed that New York and Texas hit new home price peaks again in December at $353,000 and $216,000, respectively.

The Federal Housing Finance Agency's (FHFA) House Price Index (HPI) shows that home prices rose 5.8 percent year-over-year in the fourth quarter of 2015. Prices increased 1.4 percent from the third quarter of 2015, marking the 18 consecutive quarterly price increase in the purchase-only, seasonally adjusted index. Home prices were up 0.4 percent month-over-month for December.

“Instability in financial markets did not seem to put much of a drag on home prices in the fourth quarter,” said Andrew Leventis, FHFA Supervisory Economist. The 1.4 percent rise in home prices "was in line with the extremely steady—but historically elevated— appreciation rates we have been observing for several years now."

Click here to view the full report

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