Home Price Recovery Turns Toward Negative Territory

A slowdown in February home price growth might signal near-term declines are on the way in 2014, according to a recent analysis from Clear Capital.

Nationally, home price growth slowed in February to 1%, down from 2.5% compared to the previous quarter, reports Clear Capital’s Home Data Index (HDI).

February’s progress represents the largest drop since 2010, when home price gains were “coming off the first time homebuyer tax credit,” Clear Capital remarks. 

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Additionally in February, the national saturation of real estate owned (REO) properties rose to 22.7%, the largest gain since January 2012. 

The combination of declining quarterly home price gains and increasing REO saturation could lead to future quarterly price declines in the coming months, Clear Capital suggests. 

“Our early data shows national quarterly price gains are falling at a rapid pace and suggest overall prices could dip into negative territory soon if current conditions continue,” said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital.

Though year-end forecasts project gains between 3% and 5%, the housing market is still susceptible to declines.

“While the industry agrees that 2014 will be a year of moderation, we’ll likely see more concern about declines over the next few months, as other indices catch up to the Clear Capital HDI,” the report notes.

Written by Jason Oliva

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