Friday, September 9, 2011
Home prices may weaken after summer gains
Home prices rose 4% in the four months ended Aug. 31 vs. the previous three months, market researcher Clear Capital reports today.
Yet year-over-year prices were down 6.2%, the data show. What's more, the rate of growth slowed in August, meaning that the seasonal upswing in prices "has most likely reached its peak," Clear Capital says.
Many economists have predicted that U.S. home prices, which have shown signs in recent months of coasting toward a bottom after a five-year drop, will resume dropping this fall and maybe into next year. The big question is how far prices will fall, given the recent stock market turmoil, persistently high unemployment and renewed shocks to consumer confidence stemming from the U.S. and European debt crises.
The housing market "is at a critical juncture as to whether it can avoid another significant downturn," in the slower buying seasons of fall and winter, says Alex Villacorta, director of research for Clear Capital.
One bad sign: Low mortgage rates aren't enough to entice buyers. For the week ended Friday, demand for mortgage applications to buy homes remained near 15-year lows -- and down 13.5% from the same week a year ago -- the Mortgage Bankers Association reported Wednesday. Demand is weak despite 15-year fixed-rate mortgages that averaged 3.4%, the lowest rate since at least 1990, and 30-year fixed-rate loans averaging 4.2%, a near-record low, the MBA said.
Clear Capital provides one of the earliest glimpses at national housing data. On Wednesday, real estate website Zillow also reported that, for the first time in five years, home values have increased on a national level. Its data show that the median home value rose 0.1% from June to July.
Last week, researcher CoreLogic reported that U.S. home prices in July edged up for the fourth-consecutive month but were down 5.2% year over year. The widely watched Standard & Poor's Case-Shiller home price index recently reported a price boost through June because of spring buyers. When adjusted for seasonal factors, home prices in the second quarter were basically flat with the quarter before, the Case-Shiller data show.
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