Last month’s report, for March 2011, confirmed that housing prices are headed down and that some cities have broken below the lows set in 2009. As we approach the report for April due out on Tuesday June 28th at 9 AM, here’s a look at some recent data and comments which might give a hint to next week’s news. The optimistic bits first.
The Federal Housing Finance Agency (FHFA), the federal agency which watches over Fannie Mae and Freddie Mac, published their home price index. In April their index was up 0.8%, the first increase since May 2010. The series is seasonally adjusted. However, this only covers homes where the mortgage has been sold to, or guaranteed by, Fannie Mae or Freddie Mac. So this is only part of the market — a relatively stable part of the market and may not tell the whole story. The National Association of Realtors reported prices rose 3.4% in May. Housing Starts in April rose 3.3% to 560,000, better than expected. While this means more houses to sell in coming months, home builders are betting that the market is not getting worse. Seasonal factors are becoming more favorable.
One could argue that the Fed’s recent comments are either bullish or bearish. While the central bank confirmed that the economy was softer in April and May than in the first quarter, they confidently expect activity to pick up in the second half and don’t see much danger of a renewed economic downturn in the near future.
May existing home sales fell 3.8% and April was revised down very slightly and Condo/coop sales fell 8.1% in May as well. Sales of new homes also fell in May, down 2.1%. Prices of new homes were down over the last 12 months to May. Consumer confidence weakened in preliminary June reading from the University of Michigan. Initial unemployment claims are holding steady abover 400,000.
On balance, the economy is muddling through with slow growth amidst worries about Greece, oil prices and debates about the debt ceiling. We’ll see where housing prices are next Tuesday.