With home prices down, economists seize on signs of ‘deceleration’
Add another catchphrase to the lexicon of home-price-obsessed economists: “deceleration.”
It’s either a signal of how closely watched the housing market is these days or just how desperate people are for good news. But economists and other observers are suddenly obsessed with housing’s slowing decline.
The latest example came Wednesday when Santa Ana data firm CoreLogic released its home price index that, including distressed sales, showed U.S. prices in February dropped 0.8% from January and down 2.0% from February 2011. The release came with the now-familiar caveat that, yes, prices are down, but the pace of the downward trend is slowing.
“The deceleration in the pace of decline is a first step toward ultimately growing again,” CoreLogic chief economist Mark Fleming said in the company’s news release.
Paul Diggle, property analyst for Capital Economics, echoed that sentiment in an email blast.
“House prices are now just 2.0% lower than they were a year earlier, which is the smallest annual decline in 18 months,” he wrote.
A slowing fall may not be the most comforting news for average buyers looking to plop down their life savings on a fixer-upper. But it’s led to several hopeful calls that a bottom may be nigh.
“I believe we’re very close to the inflection point,” JPMorgan Chase chief executive Jamie Dimon recently told CNBC. “People look at prices that are still coming down but all the other signs are flashing green.”
Prices are down but sales have ticked up. Housing starts have also risen in recent months. Some see optimism in these trends while others point to the unseasonably warm winter as skewing the data.
Glenn Kelman, chief executive of Redfin.com, has called a housing market bottom for 2012 but also summed up recent real estate trends in an email as evidence housing has entered a “Twilight Zone.”
“Prices went down, but we believe they’re now going up in lots of places,” Kelman wrote. “Sales volume slipped, but we think that’s because there’s nothing to buy. Every 300,000 years, the earth’s magnetic field flips, and lots of weird stuff happens then too.”
He pointed to Dimon’s comments as hope for optimism as well as a recent survey by the Urban Land Institute predicting broad improvement for housing over the next three years. With the spring shopping season around the corner and the housing bust now five years or so in the offing, any sign of a recovery is sure to be hotly debated.
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