Wednesday, May 26, 2010

Renewed Worries in Housing

Two pieces of housing data, Case-Shiller Home Price Indices and new home sales, came out this week. Some are worried that all the good news that came from the sales front did not translate into price improvement sequentially.

S&P/Case-Shiller1 Home Price Indices (C-S Index), released yesterday show that the U.S. National Home Price Index fell 3.2% 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.

“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. .................................................................................................
“While year-over-year results for the National Composite, 18 of the 20 MSAs and the two Composites improved, the most recent monthly data are not as encouraging. It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices. Now that the tax incentive ended on April 30th, we don’t expect to see a boost in relative demand.”
In a report released by Census Bureau , sales of new one-family houses in April 2010 were at a seasonally adjusted annual rate of 504,000. This is 14.8 percent above the revised March rate of 439,000 and is 47.8 percent above the April 2009 estimate of 341,000. The sales outstrips new homes for sales, bringing the months of supply to as low as 5 months (i.e. at the current rate of sales, it takes 5 months to deplete the inventory). However, the price trend is not nearly as encouraging as the sales. The median price of new home sales has been trending downward for months.

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