U.S. home values appear to have bottomed out, posting their first annual increase in five years, according to the newest Zillow market report, released yesterday.
Overall home values were up by 0.2 percent in the second quarter of the year compared to the second quarter of 2011, the first annual gain in Zillow's Home Value Index since 2007. Home prices in the index have now increased for four consecutive months and stand at a median price of $149,300.
"After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values," said Stan Humphries, Zillow chief economist. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own."
Recent gains "robust"
Despite what the Zillow report described as "robust" price increases over the past four months, concluding with a 0.7 percent rise in June, the company does not expect that trend can be maintained. Zillow's forecast calls for prices to taper off over the coming months and for the 2012 to end with a 1.1 percent price gain overall.
The strongest annual gains were seen in the Phoenix, Ariz. metropolitan area, where prices posted a 12.1 percent rise since the second quarter of 2011, an increase Zillow attributes to high demand from investors looking for rental properties, traditional homebuyers attracted by bargain prices and mortgage rates, and supply restrictions due to homeowners who are unable to put their homes up for sale due to being underwater on their mortgages.
National housing picture still unsettled
Nationally, the housing market remains mixed however, with only 53 of the 167 metropolitan areas studied showing annual gains in the current Zillow survey. Zillow predicts that about 40 percent will see price increases, led by the Phoenix and the Miami, Fla. markets, both of which were hard-hit in the housing downturn.
The Zillow report is only the latest to see an upturn in the U.S. housing market. The Federal Housing Finance Agency (FHFA) reported yesterday that U.S. home prices rose a seasonally adjusted 0.8 percent from April to May, and posted an annual increase of 3.7 percent from May 2011 to May 2012.
The FHFA figures are based on based on sales prices for homes purchased with conforming mortgages guaranteed by Fannie Mae or Freddie Mac; the Zillow survey is based on data from public records in the metropolitan areas studied.
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