November 24, 2009
Home Prices
Rise for 4th Month in a Row
WASHINGTON – The summer's trend of rising
home prices faded
at the end of the traditional home shopping season, two reports Tuesday
showed.
The Standard & Poor's/Case-Shiller home price index of 20 major
cities rose only 0.3 percent to 144.96 in September, but it was the
fourth straight monthly increase. The seasonally adjusted index is now
up more than 3 percent from its bottom in May, but still 30 percent
below its peak in April 2006
Another
reading of home prices by the Federal
Housing Finance Agency held steady from August to September.
Analysts expect prices to dip again this winter as foreclosures increase
and economic growth remains modest. The government said Tuesday that the
economy grew at a 2.8 percent rate
last quarter — less
than originally estimated. And forecasts for the next several months are
no better. Unemployment, meanwhile, could rise from the current 10.2
percent to as high as 11 percent next year.
"As
long as the
unemployment rate stays elevated, you're going to see pressure on
the pace of foreclosures, which are going to find their way back onto
the market, depressing prices," said Dan Greenhaus, chief economic
strategist with Miller
Tabak & Co.
Home
prices are a key ingredient to rebuilding the economy. Homeowners feel
wealthier when their property appreciates in value and are more likely
to spend money.
Rising prices also help millions of homeowners who owe more to
the bank than their homes are worth.
Currently, roughly one in four homeowners are in that situation,
according to First American CoreLogic, a real estate information
company. And a record 14 percent of homeowners with a mortgage are
either behind on their payments or in foreclosure, the Mortgage Bankers
Association said last week.
"We are
very worried about the potential for a huge wave of supply next year,
both from private sellers and banks," wrote Ian Shepherdson, chief U.S.
economist at High Frequency Economics. "Prices could easily reverse
their recent gains."
Spring
and summer are typically the best times of the year for the housing
market, because families prefer to move between school years. And this
year's sales were aided by a tax credit for first-time buyers, which
drove up sales nearly 30 percent between May and October.
In the
winter months, fewer homeowners put their properties on the market. That
means a bigger proportion of the sales will be foreclosures.
Last
winter, sales of foreclosures and other
distressed properties made up about half of all sales in February
and March, compared with about a third over the summer, according to the
National Association of
Realtors.
With
those low-priced properties dominating sales, Barclays Capital economist
Michelle Meyer forecasts an 8 percent drop in prices before they hit
bottom next spring, but said, "I don't expect another freefall."
Continuing economic woes will likely force many consumers to shorten
their Christmas shopping lists. Consumer confidence in the economy
improved slightly in November from October, but shoppers are still
gloomy, the Conference Board reported Tuesday.
In the
Case-Shiller report,
home prices rose in 11 major cities, with the strongest gains in
San Francisco and
Minneapolis, according to the Case-Shiller report. That's a shift
from the summer, when price gains were broad. In July, for example,
prices were up in 17 cities.
Prices
fell by the most in Las Vegas and Cleveland. Compared with a year
earlier, the 20-city index was down about 9 percent, the smallest year
over year decline since
January 2008.
"With
housing remaining an albatross around the economy's neck, nothing would
perk things up more than some increases in home prices," wrote Joel
Naroff,
chief economist at Naroff Economic Advisors. "That seems to be
happening."
The
Commerce Department on Wednesday will release
new home sales data for October. Economists expect a 2 percent
increase from September to an annualized rate of 410,000, according to
Thomson Reuters.
__
AP Economics Writer
Jeannine Aversa contributed to this report.
September
24, 2009
Fed leaves key interest rate unchanged, cites improvement in housing
The Federal Reserve this morning announced it will maintain its target for
the federal funds rate in the 0 percent to 0.25 percent range, and expects
economic conditions to warrant exceptionally low levels of the federal funds
rate for an extended period of time. “Information . . . suggests that
economic activity has picked up following its severe downturn,” the Fed said
in a prepared statement.
“Conditions in financial markets have improved further, and activity in the
housing sector has increased. Household spending seems to be stabilizing,
but remains constrained by ongoing job losses, sluggish income growth, lower
housing wealth, and tight credit. With substantial resource slack likely to
continue to dampen cost pressures and with longer-term inflation
expectations stable, the Committee expects that inflation will remain
subdued for some time.”
To provide support to mortgage lending and housing markets and to improve
overall conditions in private credit markets, the Federal Reserve also said
it will purchase a total of $1.25 trillion of agency mortgage-backed
securities and up to $200 billion of agency debt, and will gradually slow
the pace of these purchases in order to promote a smooth transition in
markets.
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Federal House Price Index up 0.3 percent nationwide, 1.6 percent in West
U.S. home prices in July rose 0.3 percent on a seasonally adjusted basis
compared with June, according to the Federal Housing Finance Agency’s (FHFA)
monthly House Price Index released yesterday. For the 12 months ending in
July, U.S. home prices declined 4.2 percent. The index is 10.5 percent below
its April 2007 peak.
The FHFA monthly index is calculated using purchase prices of houses with
mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.
For the nine U.S. Census Divisions, seasonally adjusted monthly price
changes from June to July ranged from a 0.9 percent decline in the East
South Central Division to a 1.6 percent gain in the Pacific Division, which
includes Hawaii, Alaska, Washington, Oregon, and California.
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Builder confidence increases in Sept.
Builder confidence in the market for newly built, single-family homes
increased for the third consecutive month in September, according to a
report released last week by the National Association of Home Builders (NAHB).
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI)
rose one point to 19 this month, its highest level since May 2008. All four
regions nationwide posted gains in their HMI readings for September, with
the West, which includes California, posting a one-point gain to 18.
Two out of three of the HMI’s component indexes also posted increases in
September, according to the report. The index gauging current sales
conditions rose two points to 18, while the index gauging traffic of
prospective buyers rose one point to 17. The index gauging sales
expectations for the next six months declined one point, to 29.
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September 1,
2009
Yes, the housing market has rarely looked better
The combination of affordable home prices, historically low mortgage rates, and
a first-time home buyer tax credit that’s set to expire in less than three
months has created the perfect storm of sorts for buyers who’ve been sitting on
the fence, waiting for the market to recover.
· Last
week, Standard & Poor’s reported that its S&P/Case-Shiller U.S. National Home
Price index rose from the first quarter to the second, the first
quarter-to-quarter increase in three years. Its index of 20 major cities also
rose, with only two areas reporting declines. This data suggest that home
prices may have reached bottom during the second quarter, and have now begun to
rise. In California, July marked the fifth consecutive month of month-to-month
increases in the state’s median price.
·
Real estate prices nationally have declined approximately 30 percent from their
2006 peak and are beginning to show signs of increases—an indicator that prices
aren’t likely to go much lower, according to some housing analysts.
·
The inventory of unsold homes rose 7.3 percent nationwide in July, according to
the NATIONAL ASSOCIATION OF REALTORS®. In California, inventory levels declined
to 3.9 months, from 6.9 months a year ago, and are well below the long-run
average. The index indicates the number of months needed to deplete the supply
of homes on the market at the current sales rate.
·
Buyers sitting on the fence should note that the federal tax credit of up to
$8,000 expires at midnight on Nov. 30, 2009. With mortgage loans taking longer
to close than in years past, buyers should start working with a REALTOR® now to
ensure they find the right house for their needs, and close escrow by the
deadline.
·
Homeownership provides many benefits, including security, pride of ownership, a
sense of community, and decent investment returns as a bonus. Those thinking of
purchasing a home should consider these benefits when making their decision of
whether or not now is the right time to buy a home.
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