Is less than one percent increase in home sales prices for the month of April even worth mentioning, much less calling a trend? Hey, at least prices are up, and for the first time since last September. But for how long since the federal tax credit has dried up?
The overall national prices are on the rise since the same time last year by almost four percent. But over a longer curve since the bubble bust in ’06, down an overall thirty percent of the peak national prices.
Only two cities recorded a decline as reported by the S & P home price index at the end of June. Eighteen other cities cited in the report had increases maxing out at two percent for a few. And this was a reversal for over half from declines last month.
Since the federal tax incentives are dead and gone, having finished up at the end of April, this very slight figure falling at a time of year that traditionally posts strong gains in sales and price increases is not a good indicator of recovery. It is being speculated that this tiny number indicates a possible drop in prices for next month.
The fact that the economy is not receiving a sufficient and sustainable boost from the housing sector is the consensus of the S & P management. S & P’s index chairman, David M. Blitzer has been quoted that he does not expect that support until next year. He feels it will be clear the vast impact of the Federal program once more data from other sectors are collected.
A very troubling figure has been released by the government that actually reports new home sales fell in May to the lowest level yet, plunging a stunning thirty three percent from April. The last time growth was so limited was almost forty years ago.
Large scale new homebuilders such as KB Home and Lennar Corporation report drastic drops in new home orders for the last quarter.
Some very pessimistic analysis suggests that further decline is imminent. Predictions of price declines are sharp, in the near future, widespread and sustained for the next year to the tune of up to eight percent. As a consequence all of the cities in the twenty city index will have falling prices within a few months.
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