Home Prices Start Year With 2.6% Annual Drop

Data through the end of January released by ""Clear Capital"":http://www.clearcapital.com Monday shows home prices in the U.S. are down 2.6 percent from a year ago.
[IMAGE] The company's rolling quarter assessment, which compares the four months through January 2012 to the previous three months, returned a 1.6 percent decline in home prices at the national level, after three months of stability.

Clear Capital says the culprit is the Midwest market, which saw a dramatic turnaround in momentum, losing 4.0 percent quarter-over-quarter, and marking the first time in seven months it has led the nation in quarterly losses. That compares to a loss of just 0.4 percent reported last month for the rolling quarter.

These shorter term declines pulled down the Midwest's year-over-year returns to -5.2 percent. Clear Capital says this drop in values can be partly attributed to a 1.5 percent uptick in REO saturation in the region over the past quarter, from 29.5 percent to 31 percent.

Other regions of the country showed little change in prices, with quarter-over-quarter declines of less than 1.0 percent, according to Clear Capital's report.

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The Northeast region remained essentially flat over last month's report with a very mild quarterly loss of 0.7 percent, and year-over-year growth of 0.1 percent. Clear Capital says this region has been resilient over time with relative stability in both annual and quarterly numbers, but it also boasts overall losses of just 22.5 percent since the height of that market's value in 2006, as compared to the national average of 40.5 percent depreciation since the peak.

The Southern and Western regions posted similarly mild price changes quarter-over-quarter, with a 0.9 percent decline for each each and price decreases of 1.8 percent and 3.5 percent, respectively, year-over-year.

The West, in particular, is picking up steam in terms of recovering lost value. Clear Capital notes that after consistent weakness throughout 2011, the West reduced its year-over-year losses by nearly a full percent when compared to last month's results of -4.4 percent. The company says the difference can be partly attributed to a decline in REO sales in the region, from 38 percent in the first quarter of 2011 to 31 percent as of January 2012.

""Although prices at the national level continue to slide due to pressure from the Midwest, the lower priced segments of several specific markets are bucking the trend and seeing appreciation, suggesting that recoveries could be occurring from the bottom up,"" said Dr. Alex Villacorta, director of research and analytics at Clear Capital.

However, Villacorta added, ""When we look at the strength in the bottom tier of prices, the volatility within the metro markets, the rapid changes in direction with certain regions, and relative stability in others, these factors underscore the economic and market fragility that remains a dark cloud over housing prices.""