After a year of notable improvements across the board for the housing market, a new report from Clear Capital shows home prices were up in December on both month-over-month and year-over-year measurements. Additionally, the data firm's Home Data Index predicts an even healthier outcome for 2013.
Home prices were up 0.9 percent over the quarter, and practically matched the 1 percent gain seen in November. On a year-over-year basis, price gains were 4.9 percent higher in December 2012 when compared to December 2011, pushing the year-end increase to 4 percent. Economists from Clear Capital say national home prices should increase by around 2.1 percent throughout 2013.
"2013 should be interesting for the housing market, where national gains should continue to see upward growth but likely at a more modest rate," said Alex Villacorta, director of research and analytics at Clear Capital. "Keeping in mind our current gains are off market lows at the start of the year, 2013 gains will be measure against a higher price floor after a full year of recovery."
Regions recovering at varying paces
According to data from the HDI, the West saw a significant year-over-year increase in home prices, moving up 11.8 percent in December. However, sizable gains are more emphasized because of how low some markets in this part of the country fell to during the housing market slump. Home prices could increase 2.8 percent in 2013.
The South also saw notable gains over the last 12 months, as home prices were up 4 percent, though they will likely only increase 2 percent over the next year. Prices jumped 3 percent in the Midwest, though the data firm suggests a 2.3 percent recovery could come in 2013. The Northeast posted the smallest recovery, with home prices rising just 2 percent. Clear Capital predicts the region will see gains of just 1.4 percent in the coming months.
On a quarterly basis, the Northeast posted a 0.3 percent gain in value, while they were up 2.1 percent in the West. The Midwest and the South saw comparable growth, as prices increased 0.6 percent in both regions.
High affordability will be extended via mortgage rates, as predicted by many economists. Data from Freddie Mac's first Primary Mortgage Market Survey in the new year showed the average rate for 30-year fixed-rate mortgages was 3.34 percent, up from the final week of 2012 when it averaged 3.35 percent. Additionally, the average for 15-year FRMs lingered near record lows at 2.64 percent for the week ending January 3.