A barrage of key reports on housing showed price declines easing, sales of new homes improving from last year and foreclosures in California dropping to levels not seen since before the start of the credit crunch nearly five years ago. Taken together, the data paint a muddled but moderately positive picture of a market headed toward bottom, economists said Tuesday.
“Fundamentals for the housing market are improving: affordability is very high given the drop in prices and extremely low interest rates, and the labor market is gradually healing,” economists for PNC Financial wrote in a note Tuesday morning. “However, tight credit remains a problem. Foreclosures are weighing on prices and will continue to do so in the near term.”
Perhaps the most encouraging report Tuesday was news that during the first three months of the year the number of homes entering foreclosure in California declined to a level not seen since the second quarter of 2007. That was an 8.5% decline from the prior quarter and a 17.6% plunge from the same period a year prior, San Diego real estate research firm DataQuick reported.
Even the bad news had a silver lining. Home price declines in big American cities continued but also moderated, according to the Standard & Poor’s/Case-Shiller index of 20 American cities. The index dropped 0.8% from January to February, and 3.5% from February 2011. Sixteen cities tracked by the index posted declines and nine cities saw average home prices hit new lows.
Los Angeles fell 0.8% from the prior month, while San Francisco was down 0.7%. San Diego was slightly positive, up 0.2% from January.
And while new home sales nationally fell 7.1% in March the government revised figures for February up significantly. Even though the figure for March was the lowest since November, it was slightly above analyst expectations and helped cheer Wall Street.
“Sales are improving at a snail’s pace from near record lows, with the South accounting for the lion’s share of the gains. Inventory continues to shrink — good news, since builders will have to replenish stocks by ramping up on starts once demand picks up,” IHS Global Insight economists Patrick Newport and Erik Johnson wrote in a note to clients. “New home sales should fare better in 2012 than they did in 2011, when they set a record low.”