Home prices in October continued to rise for the 20th consecutive month in a row. The CoreLogic home price index revealed that nationwide home prices increased a total of 12.5 percent, compared to October 2012. The data shows that year-over-year appreciation continues to strengthen.
Home prices increased a total of 11 percent, if distressed sales are excluded. Distressed sales happen when there is an urgent need to sell a home, such as during a foreclosure or divorce.
The rise in home prices indicate there is a demand from consumers to purchase property. An increase in home prices is a good sign the economy is headed in the right direction. People who are willing to spend more show they have more money to use towards home ownership.
Housing is a critical component of a strong economy. When consumers are willing to purchase homes it frees up a portion of their money to use and spend towards other items.
How do states and cities compare?
Data collected in the CoreLogic home price index shows that states and major cities across the nation have seen significant year-over-year increases in October. The Nevada 12-month home price index increased the most with a total of 25.9 percent. Nevada’s increase was followed by California which had a 22.4 percent total increase. Those two states were the only ones to increase a total of 20 percent or more over 12 months.
12-month HPI change among the top 5 states
- Nevada 25.9%
- California 22.4%
- Georgia 14.2%
- Michigan 14.1%
- Arizona 14%
Nevada and California rose significantly higher than other states. California rose over eight percent higher than Georgia, the next state with the highest year-over-year home price increase.
The HPI change in five major U.S. cities
- Los Angeles – 22.1%
- Atlanta – 16.4%
- Chicago – 12.3%
- Houston – 10.9%
- New York – 9.1%
*Statistics include distressed sales.
How are lenders reacting?
An increase in home prices does not necessarily mean people are going to have to save more money to use as a down payment towards a home. In fact, the national average down payment for homes dropped to 15.73 percent, as opposed to the traditional 20 percent. Lenders feel more confident and trusting of home buyers and this is why they are willing to allow home buyers put less money down to secure a home.
An increase in home prices, coupled with a decrease in the national average down payment required to purchase a home, is a good sign for the housing market.