Monday, February 28th 2011 By Carla Hill
The housing market continues to keep experts and analysts on their toes. While existing-home sales rose again in January and are outpacing year-ago levels, we are still seeing a drop in home prices across much the country. Existing-home sales increased 2.7 percent in January and are 5.3 percent above January of 2010.
Lawrence Yun, NAR chief economist, sees the rise as positive, but with room for improvement. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”
Regionally, the West saw the largest existing-home sales increase. In the West they rose 7.9 percent and are 7.0 percent above January 2010. The Midwest and South also saw monthly rises — up 1.8 and 3.6 percent respectively.
The Northeast didn’t fare as well. The Northeastern region is down 4.6 from December and down 1.2 from year ago levels.
The most recent reports from the Case-Shiller Index have brought on a slew of comments from the experts. The Case-Shiller quarterly index showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010.
Karl Case reports that the housing market is “a rocky bottom with a down trend.” And, unfortunately, he was the optimist!
Mr. Robert Shiller, on the other hand, reported that the increased precedence of foreclosures, as well as the impending decisions over the future of Freddie Mac and Fannie Mae, leaves risk of future declines at 15 to 25 percent.
Realty Trac reports that 26 percent of all homes sold in 2010 were foreclosures and short sales. The states with the largest percent of distressed sales were Nevada, at 57 percent of all sales; Arizona, at 49 percent; California, 44 percent; and Florida 36 percent.
It’s the slow jobs recovery that is partially to blame for this second hit on the housing market, however, new reports from the Labor Department indicate that jobless claims fells again last week. It is now at the lowest levels since late July 2008.
This is a bit of welcome news for a market that is yearning for a bright spot.
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