House prices fell in the first quarter of 2010 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted, purchase-only house price index (HPI) and the S&P/Case-Shiller Home Price Indices.
The HPI, calculated using home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages, was 1.9 percent lower on a seasonally adjusted basis in the first quarter 2010 than in the fourth quarter of 2009. The unadjusted national decline was 2.2 percent. Over the past year, seasonally adjusted prices fell 3.1 percent from the first quarter of 2009 to the first quarter of 2010.
Data through March 2010, released by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, show that the U.S. National Home Price Index fell 3.2 percent in the first quarter of 2010, but remains above its year-earlier level.
In March, 13 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down, although the two composites and 10 MSAs showed year-over-year gains. Housing prices rebounded from crisis lows, but recently have seen renewed weakness as tax incentives are ending and foreclosures are climbing.
“The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices,” says David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover.
FHFA’s seasonally adjusted monthly index for March was up 0.3 percent from its February value, offsetting some of the price decreases in the prior months. The monthly change for the January-to-February period was revised downward to -0.4 percent, from an initial estimate of -0.2 percent. |
Sales Are Up in April
Existing-home sales rose again in April with buyers motivated by the tax credit, improving consumer confidence and favorable affordability conditions, according to the National Association of Realtors.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70-million-unit pace in April 2009. Monthly sales rose 7.0 percent in March.
Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”
Starts Rise in April
Housing starts rose 5.8 percent in April, while permits for new housing units fell 11.5 percent in the same period. Overall, permits have grown 15.9 percent over the past 12 months and starts have risen 40.9 percent, according to data released by the Commerce Department’s U.S. Census Bureau.
“Monthly housing data is quite volatile, but housing permits and starts have risen substantially over the past year,” U.S. Commerce Secretary Gary Locke said. “Employment has begun to increase, and further economic growth should help sustain home-building activity in the coming months.”
Road to Recovery but with Bumps
Economists participating in a National Association of Home Builders (NAHB)Construction Forecast Conference Webinar agreed that the housing market is on the road to recovery, but cautioned that several factors could contribute to a bumpy ride in the coming months.
With the expiration of the tax credits in April, housing momentum is being carried forward by low interest rates, pent up household formations, stabilizing prices and budding employment growth, said NAHB Chief Economist David Crowe.
Obstacles include the critical shortage of credit for new and existing projects, competition from short sales and foreclosures, and regional economic disparities.