December 5, 2011 (Jeff Alan)
Although some recently released housing price indicators continue to show the long-term trend in housing prices remains negative, short-term trends suggest that the housing market may finally be showing signs of improvement according to the latest RPX Monthly Housing Report for September released by Radar Logic.
Depending on the housing price index, year-over-year home prices have generally improved from two to four percentage points since the beginning of the year and that trend is expected to continue with the rate of decline slowing until prices finally touch bottom.
Home prices will continue to decline because of the persistent imbalance of supply and demand in the housing market, but the situation is showing signs of improvement. Existing home inventories have dropped from a record 4.48 million properties in July 2008 to 3.33 million properties in October, an 8.0 month supply. A year ago, there was still over four million properties for sale, a 10.7 month supply. A healthy housing market typically has a six month supply of inventory.
In addition, the RPX transaction count of the 25 metropolitan areas that it surveys shows the change from January to September of this year was greater than during the same period last year and in September posted a 15.4 percent year-over-year increase in transactions, the largest for that month since 2003.
“We may indeed be seeing the beginning of at least a ‘soft landing’ in housing,” said Michael Feder, President and CEO of Radar Logic. “Activity is stable, price declines have slowed and it is unlikely that many more borrowers will enter default or that many more homes will go ‘underwater.’ While this may not be the beginning of a recovery, the data suggest it may well be the beginning of an equilibrium, which if the case, should and probably will boost buyer confidence. If it does, a recovery may not be far away.”
Twenty-three of the 25 metropolitan areas featured in the Index registered year-over-year price declines. The only areas to post a price increase were Detroit (+7.1%) and Washington D.C. (+1.8%).
The metropolitan areas that posted the largest year-over-year decline in home prices was Las Vegas (-12.4%) followed by Seattle (-10.4%). The rest of the metropolitan areas posted declines of less than ten percent.
Month-over-month, only four metropolitan areas posted a price increase with Phoenix (+2.5%) posting the largest gain followed by San Diego (+1.8%), Detroit (+1.5%) and Milwaukee (+1.4%).
The metropolitan area that posted the largest monthly decline in home prices was Boston (-7.1%) followed by Jacksonville (-5.9%) and Atlanta (-3.6%).
Year-over-year home transactions increased in all 25 metropolitan areas with the largest gains posted in Minneapolis (+68.4%), Boston (+64.8) and Atlanta (+31.6%). Jacksonville (+0.8%), Detroit (+3.2%) and Washington D.C. (+3.8%) posted the smallest increases in home transactions.
Twenty of the 25 metropolitan areas posted a decline in monthly transactions led by Boston (-19.5%), Jacksonville (-13.0%) and Philadelphia (-12.8%). The biggest gains in transactions were reported in Cleveland (+3.9%), Sacramento (+2.9%) and San Francisco (+1.0%).
Tags: Radar Logic, RPX Composite Price Index, housing prices, housing sales transactions, rate of decline, declining prices