FHFA’s housing price index is calculated using home sales price information based off Freddie Mac and Fannie Mae-backed mortgages.
FHFA’s seasonally adjusted monthly index rose 1.8 percent in March over February, which is the largest monthly increase in at least 20 years. Year-over-year, home prices increased 2.7 percent, FHFA reports.
"Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices," says Andrew Leventis, FHFA’s principal economist.
Price increases were the highest in Hawaii with a 10.3 percent increase, and in Washington, D.C., which saw a 9.8 percent gain, according to FHFA.
Still, Number of Underwater Home Owners Remain High
Despite recent improvements in home prices, the percentage of underwater borrowers has shown little improvement in the last year. More than 30 percent of home owners in the first quarter remained underwater on their mortgage, owing more on their home than it’s currently worth, according to a new Zillow housing report.
A year ago, 32.4 percent of all borrowers had negative equity on their loan compared to 31.4 percent during the most recent quarter, Zillow reports.
Yet, Zillow notes that nine out of 10 underwater borrowers are current on their mortgage payments.
"[It's] important to note that negative equity remains only a paper loss for the vast majority of underwater home owners," says Stan Humphries, Zillow's chief economist. "As home values slowly increase and these home owners continue to pay down their principal, they will surface again."
The highest share of underwater home owners continues to be in Las Vegas, where 71 percent of home owners are underwater, followed by Phoenix (at 55.5 percent) and Atlanta (at 55.2 percent), according to the Zillow housing report.
Source: “U.S. Housing Prices Rise,” UPI (May 23, 2012); “Home Prices Rose Most in Two Decades in March, FHFA Says,” Bloomberg News (May 23, 2012) and “More than 30% of Mortgage Borrowers Still Underwater,” CNNMoney (May 24, 2012)
Posted by Bradford Miller Law, P.C.
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