Flat Home Prices Through 2013?
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- Kara Johnson | December 06, 2011
Home prices will remain largely unchanged over the coming year, despite recent signs of stirring economic activity, according to a new report from the real estate analytical firm CoreLogic.
October home prices were down 3.9 percent compared to the same month one year before, a slight worsening from the 3.8 percent annual decline reported in September. That’s according to the CoreLogic October Home Price Index, released today.
That’s combined with a 1.3 percent month-to-month decline in October, the third consecutive month prices have trended downward.
“Home prices continue to decline in response to the weak demand for housing,” said Mark Fleming, CoreLogic chief economist. “While many housing statistics are basically moving sideways, prices continue to correct for a supply and demand imbalance. Looking forward, our forecasts indicate flat growth through 2013.”
Positive trends also seen
Even so, there were some encouraging trends in the data. Sales prices for non-distressed properties, excluding foreclosures and short sales, were down only 0.5 percent compared to October 2010, compared to a 2.1 percent annual rate of decline reported in September.
An analyst for Barclay’s Capital called the stabilization of non-distressed home sale prices over the past year “the most important trend in the housing industry right now,” and noted it has occurred despite continuing high rates of distressed home sales and overall price declines.
Combined with recent reports showing improved job creating, housing starts and interest among potential homebuyers, Barclays analyst Stephen Kim said the figures suggest a housing rebound may be in the offing.
Other recent reports showed a modest rise in new home sales, up 1.3 percent in October according to the Commerce Department, and a surge in pending home sales, up 10.3 percent for the month, according to the National Association of Realtors.
Much of the uncertainty over the direction of the housing market is tied to the large backlog of foreclosed properties and “shadow inventory” of homes awaiting foreclosure. However, foreclosures tend to be concentrated in certain markets, so that many analysts are predicting an uneven recovery, with many areas rebounding while foreclosure-heavy markets continue to struggle for years to come.
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