Slow Drop in Home Prices Despite Rise in Repossessed Homes
A study of home market prices in 20 metropolitan areas last March showed a moderate decline in figures despite an increase in the number of repossessed homes. Economists agreed that the slow pace of home price decline is indicating towards a moderate housing crisis.
The home price S&P/Case-Shiller index dropped by 18.4 percent compared with figures from last year and a decline of 18.6 percent in February. Meanwhile, a market study showed that consumer confidence increased to a half-year high this month.
Declining mortgage rates and home prices have made properties affordable, softening the drop in sales and preventing the housing market slump from further deterioration. However, the increasing unemployment and unabated foreclosures will continue to put pressure on values of properties and prevent the housing market from doing a fast recovery.
Herrmann Forecasting chief economist John Herrmann pointed out that things in the housing market are starting to stabilize while the inventory of homes still on the market is showing signs of lessening.
Meanwhile, the Conference Board is expected to report an improvement in the consumer confidence index, with a 43 percent rise this month from 39.2 in April. The May consumer confidence rate was the highest since November last year.
On the other hand, the drop in home prices due to the flood of foreclosure homes in the country has driven resales in the housing market. According to economists, the National Association of Realtors data showed that existing home sales increased by 4.66 million in April.
The association said that distressed properties accounted for about 50 percent of home resales in March, while first-time homebuyers acquired 51 percent of properties in the same month.
In April, filings for repossessed homes in the country increased further for two consecutive months, with a total of 342,038 homeowners receiving notices of default or auction. The figures showed that one out of 374 homeowners received a foreclosure filing.
However, despite the rise in the number of repossessed homes, some companies are optimistic that property demand is stabilizing.
According to Robert Toll, chief executive officer of Toll Brothers Inc, deposits for new homes increase in the company’s fiscal second quarter compared with figures from a year ago.
He added that the average home sale price declined to $563,000 in the company’s fiscal second quarter as filings for repossessed homes rose again to another record high.
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