Why home prices might be nearing an improvement
In February, the 20-city Case-Shiller index, which monitors home price trends from metropolitan areas in the U.S., registered a 3.5 percent slide. Home prices have already dropped on average 33 percent from their peak, and we have seen slow, continuous declines ever since. With the steady drop in prices, we are starting to see the question asked with more urgency: when will the housing market bottom out so that prices can begin to recover?
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Real Estate update – April and May 2012 Indicators
Over the past week, we have seen a handful of positive numbers released, pointing to positive trends in housing numbers. Following is a recap of April housing starts, April housing permits, home builder confidence, foreclosure activity and mortgage activity:
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Home purchase demand increases
For the third straight week, demand for refinance and home purchases increased. The Mortgage Bankers Association said that its index tracking mortgage applications rose 1.7 percent for the week ending May 4. The share of refinance activity came in at 72.1 percent, down from 72.6 percent the week before. Record low mortgage rates have accounted for the busy refinance activity.
March Pending Home Sales Jump
The overall upward trend continues for pending home sales, with a 4.1 percent jump in March. Here is something interesting though – while contract signings have increased 17 percent since September, closings have only kept pace at a 5 percent increase. Still, as Bloomberg News reported, the March gains are “unusually strong” for the season, and come amidst the issues of tight credit and appraisal difficulties. This is a positive report.
March Housing Starts Down
Housing starts fell 5.8 percent from the previous month in March to 654,000. From a year ago, starts are actually up 10.3 percent.
March Existing Home Sales Decline
Existing home sales in March fell 2.6 percent to a 4.48 million unit pace. On a year-over-year basis, existing home sales increased 5.2 percent.
Other March home numbers:
- The supply of homes on the market settled at 6.3 months.
- The median sales price rose 4.6 percent to $163,000.
- The average home price rose 4.9 percent to $211,000.
MBA Purchase Applications Drop
A week after purchase application surged 7.2 percent – influenced by buyers wanting to beat the premium increase on FHA loans, they fell 0.5 percent ending April 6. The four-week average is at 2.2 percent growth.
San Luis Obispo County Home Sales Increase
In February, 215 homes sold in San Luis Obispo County, which is a 9.7 percent increase from the same month in 2011. As reported by the Tribune, this number represents a positive improvement over January’s numbers, which had fallen year-over-year. Also during February, San Luis Obispo County median home price fell 0.3 percent year-over-year to $319,000.
New Home Sales Down, Median Prices Up
New home sales fell for their third consecutive month in February. Sales fell 1.6 percent in February, falling below consensus range (315,000 to 345,000) with an annual rate of 313,000.
At the same time, median home prices surged 8.3 percent in February to $233,700. Housing supply settled at 5.8 months after lows in January and December of 5.5. This is the third lowest reading we have seen during the recovery.
Home Re-Sales Had Best Winter in 5 Years
The last three months marked the best winter in five years for previously occupied homes. January had the highest level since May 2010, at 4.63 million units sold. February sales fell 0.9 percent to 4.59 million.