According to recent data released from the Federal Housing Finance Agency [1], seasonally adjusted home prices have surged 8.4% from November 2012 to November 2013, bringing national home prices to 2005 levels. This represents the fastest quarterly pace of price appreciation since 2006. Furthermore, the November 2013 foreclosure report from CoreLogic shows that national foreclosure inventory has fallen 34% over the past 12 months, and the rate of seriously delinquent mortgages is at a five-year low. In aggregate, the data presents a favorable sign that the housing market is continuing to rebound from the financial downturn. Housing market trends not only reflect the overall health of the economy, they also tie directly to the revenue capacity of local governments, which often rely on property tax revenue.

Home prices appreciated year over year in all 50 states and the District of Columbia. Leading the nation in year-over-year gains were Nevada, California, Arizona, Florida, and Washington. However, these five states also lag the furthest behind third-quarter 2007 levels. The problem is especially acute in Nevada, where home prices remain over 40% below the prerecession peak. We are also concerned about the housing recovery in Connecticut, Delaware, Illinois, New Jersey, and New Mexico; prices in these states lag third-quarter 2007 levels by 13%-16% but have grown at the slowest pace in the nation at between 2%-3% over the past 12 months.

Source: Federal Housing Finance Agency

Thirty-eight states still lag third-quarter 2007 levels, though 34 of the 38 lag by only 10% or less. Home prices in resource-rich states North Dakota, South Dakota, and Texas are now at all-time highs and exceed prices from 2007 by more than 10%; North Dakota is the leader of the pack, with a 28.9% price increase since third-quarter 2007.

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