The double-dip in home prices that started in 2010 continued to take
home prices lower this spring and summer. Single-family home prices
dropped 5.9 percent in 2011 second quarter compared to a year ago,
according to the national Fiserv Case-Shiller home price indexes. Prices
fell in 340 out of 384 metro areas, with 302 metros hitting new home
"Housing affordability has improved dramatically because of declines in
both prices and mortgage interest rates," said
Elaborating on the reasons for continued weakness in the housing market, Stiff continued, "Although homes have become much less expensive, housing demand remains depressed with existing home sales back to 1998 levels, averaging 4.3 million units per year since June. Many households cannot finance first-time or trade-up home purchases to take advantage of lower home prices because of much stricter mortgage lending standards. But even households with access to mortgage credit are hesitant to buy homes while job growth is weak and consumer confidence is low."
Stiff pointed to several factors that can help the market find a bottom and begin a gradual and cautious recovery. "If economic growth picks up in the second half of 2011, then home prices should stabilize early next year. New housing construction is at an all-time low and inventories of foreclosed properties are starting to shrink. Lower levels of housing supply and more steady demand next year will reduce downward pressure on prices. As homebuyers become more confident, many who are sitting on the sidelines will begin to enter the market and prices will start to increase. But we should not expect a rapid rebound in home prices. Very large inventories of foreclosed properties must be liquidated and absorbed before the healthy functioning of housing markets is restored."
"Potential buyers must be convinced that the economic recovery is back on track and that the double-dip in home prices is nearly over before housing demand will begin to rise," Stiff concluded.
Other highlights from the latest Fiserv Case-Shiller Indexes include:
The Fiserv Case-Shiller Indexes, which include data covering thousands
of zip codes, counties, metro areas and state markets, are owned and
Representative home price data for major U.S. markets:
|Metro Area||Population||Change in Home||Change in Home||Forecast Change in|
|(2008:Q2 to 2011:Q2)||(2010:Q2 to 2011:Q2)||(2011:Q2 to 2012:Q2)|
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