Study Claims Home Prices Only Partly Dependent on Distressed Sales

Clear Capital reports a slowdown in both home price gains and real estate owned saturation rates in April suggesting price trends are only in part dependent on distressed sale volume and "re-enforcing the need to understand local markets." The company's Home Data Index Market Report shows U.S. home prices dropped 5% in April, marking an additional 1.1% decline nationally compared to March. The increase in the nation's real estate owned saturation rate slowed down in April, rising less than one percentage point to 29.6%. Analysts note that while REO saturation rates averaged over 33% during the last quarter, the country's highest performing metro areas saw "relatively flat" prices, a trend that was different from lowest performing areas where REO saturation rates were much lower and prices declined 11.1%. "This paradox" suggests that price trends are not wholly dependent on distressed sale volumes, Clear Capital said. HDI also shows "a marked slowdown in the rate of decline" compared to a 3.9% drop compared to February data and "steady" year-over-year price gains at 5.1% in all four regions. It warns however that the decline is "sufficient enough to halt" the recent growth in year-over-year gains for the center regions of the nation.