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WINTER SEASON SLOWS HOME PRICE GAINS National home prices continued to post strong yearly gains in January as lower-priced homes drove activity in the housing market, according to a report from Clear Capital. At the same time, prices showed signs of weakening on a quarterly basis. At the national level, January home prices increased 5.4 percent from a year earlier, but inched up by just 0.9 percent quarter-overquarter, the data provider reported. Out of the four regions, the West posted yearly gains and quarterly gains of 12.9 percent and 2.1 percent, respectively. As prices rise and REO saturation (the portion of REO sales relative to total sales) decreases, Clear Capital expects price trends to moderate. REO saturation has fallen in the West from a peak of 52.5 percent in March 2009 to 17.2 percent in January 2013. The remaining regions all saw yearly gains, with the South experiencing a 4.5 percent improvement in prices, followed by 2.7 percent in the Midwest and 2.4 percent in the Northeast. However, prices were essentially flat on a quarterly basis in the three regions: South (+0.7 percent), Northeast (+0.6 percent), and Midwest (+0.2 percent). Dr. Alex Villacorta, director of research and analytics at Clear Capital, explained the softened quarterly gains suggest ���the budding recovery is not immune to the slower winter season.��� ���What remains to be seen is if home prices will continue to rise or remain stable through 28 the winter,��� Villacorta added. ���Regardless of what trends play out in the near term, we expect home prices to continue on a positive trajectory long term.��� Clear Capital pointed to the low-tier-priced segment as the ���main driving force in markets across the U.S.,��� more specifically, homes that sell for $102,000 and less. According to the company���s report, many of these lower-priced homes are REOs, which are attractive to both investors and first-time buyers. ���REO sales continue to make an impact on the overall health and recovery of the housing market,��� the data provider stated. Nationally, the REO saturation rate has fallen from its March 2009 peak of 41 percent to 18.4 percent in January 2013. After measuring price trends in metro areas, Clear Capital noted one surprising occurrence: No Florida metros made the company���s top-15 list for price growth. ���On a more micro level, Florida metros, namely Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list,��� Villacorta said. ���While this isn���t confirmation that the recovery is finished in the Sunshine State, it���s certainly something to keep an eye on.��� On average, metros on the top 15 list registered yearly gains of 13.4 percent, well above the national average, but reported quarterly gains under 5 percent. Six of the top 15 metros were in California. CONGRESS UNLIKELY TO EXPAND MORTGAGE PROGRAMS: KBW Coinciding with a House committee hearing February 6 on the Federal Housing Administration (FHA), the boutique investment firm Keefe, Bruyette & Woods (KBW) released its predictions of what actions the government is likely to take to further assist the housing market. Generally speaking, ���any large program expansions, which require congressional approval are, in our view, not likely to go far,��� said Brian Gardner, SVP of Washington research at KBW. The government���s two flagship housing programs introduced in 2009, the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP), are set to expire at the end of this year. HAMP and HARP have assisted 1.4 million and 1.8 million homeowners, respectively. President Obama has already expressed his support for expanding government refinance programs, but thus far Congress has resisted. Obama proposed expanding access to refinancing through FHA, a program that would draw funding through a tax on banks. He also proposed a program to allow borrowers whose loans are not backed by Fannie Mae or Freddie Mac to refinance through the GSEs. Both programs required congressional approval, and both programs were denied. Gardner suggested FHA���s current financial state ���makes it almost impossible politically that it would be a vehicle for any mass-refi program.��� However, Gardner does not anticipate the FHA will require a draw from Treasury this year. Sens. Barbara Boxer (D-California) and Bob Menendez (D-New Jersey) introduced the Responsible Homeownership Refinancing Act to extend HARP for one year and expand eligibility. The bill was held up in Congress last year, but Gardner believes the senators will push for its passage again this year. ���While we think there is a modest chance that Menendez-Boxer may pass the Senate, we think chances of the bill passing the House are quite low,��� Gardner stated. According to Gardner, housing market assistance measures that can be passed without congressional approval have the best chances of being implemented. KNOW THIS Existing-home inventory stood at just 4.4 months��� supply as of December 2012, the National Association of Realtors reports.