Thursday, March 04, 2010
Home Prices Decline 1.2% -- Smallest Drop in 2 Years
By Kathleen M. Howley
Bloomberg.com
U.S. home prices fell 1.2 percent in the fourth quarter from a year earlier, the smallest loss in two years, as a federal tax credit for homebuyers boosted demand.
Prices were down 0.1 percent from the third quarter, the Federal Housing Finance Agency said today in a report. The year-over-year drop was the smallest since a 1.1 percent decline in 2007’s fourth quarter, the Washington-based agency said.
Government stimulus programs including the homebuyer tax credit and a Federal Reserve program to buy mortgage-backed bonds lifted the real estate market in the closing months of 2009. A sustained recovery in housing faces hurdles that include mounting foreclosures and a weak labor market, said Thomas Lawler, a former economist with Fannie Mae who now is an independent housing consultant in Leesburg, Virginia.
“The government programs have helped to stabilize housing, but the market is still unbelievably fragile,” Lawler said in an interview. “Nobody knows what’s going to happen to all those properties in the foreclosure process.”
Prices in December slipped 1.5 percent from a year earlier. Prices rose 0.7 percent in the region that includes California, and 0.3 percent in the area of the country that includes Texas. Prices in New York, New Jersey and Pennsylvania fell 0.4 percent, while New England states had a 1 percent decline.
Credit Extension
Sales of existing homes jumped 14 percent in the fourth quarter to an annual rate of 6.03 million from 5.29 million in the previous three months, the National Association of Realtors said in a Feb. 11 report. The inventory of homes on the market dropped to 3.29 million in December, the lowest level in more than three years, according to the Chicago-based trade group.
President Barack Obama in early November extended the tax credit beyond its original Nov. 30 deadline. The new version keeps the $8,000 first-time homebuyer benefit and makes a smaller credit available to some move-up buyers. To qualify, buyers must have a signed contract on a property by the end of April and purchase it before July 1.
The Fed began buying $1.25 trillion of bonds backed by home loans last year in an effort to drive down fixed mortgage rates. The rate dropped to an all-time low of 4.71 percent during the first week of December, according to McLean, Virginia-based Freddie Mac. The program ends next month.
The U.S. economy grew at a 5.7 percent annual pace in the fourth quarter, the fastest in six years. Industrial production rose 0.9 percent in January as factories churned out more consumer goods and equipment, according to Fed data. The increase followed a 0.7 percent gain the prior month.
Jobs: ‘Quite Weak’
The jobless rate fell to 9.7 percent in January after reaching a 26-year high of 10.1 percent in October, according to the Bureau of Labor Statistics. It probably will average 9.8 percent in 2010, according to the median estimate of 66 economists surveyed by Bloomberg. That would be the highest yearly rate in government records dating to 1948.
“The job market remains quite weak,” Federal Reserve Chairman Ben Bernanke said in Congressional testimony yesterday. More than 40 percent of the unemployed have been out of work for more than six months, double the year-earlier share, he said.
Today’s report from the FHFA measures values using repeat data on individual properties without providing specific prices. The U.S. median home price was $172,900 in the fourth quarter, according to the National Association of Realtors.
Scott Chappell and Brian Bean
Real Estate Brokers
http://www.scott-brian.com/
http://www.orangecrestriversidehomes.com/Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula
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