After a bad start, this year’s spring selling season seems to be on course for an even worse finish.
Pending home sales were down in April, registering a 26.5% drop from the previous year and 11.6% lower than the month before, according to numbers released by the National Association of Realtors (NAR).
In a press statement, Laurence Yun, NAR’s chief economist, pointed to bad weather as well as spikes in oil prices and unemployment to explain the bad numbers. He also noted that housing wasn’t alone, as retail sales and furniture stores also saw drop-offs in demand. Even so, “the magnitude of the fall in pending home sales is larger than can be implied by broad economic factors,” he consented. “We need to see if it’s just a one-month aberration.”
Overall consumer confidence fell even further in May, according to numbers released today. For housing, the drop-off in demand isn’t likely to abate until consumers can take their wary eyes off of distressed properties, whose large numbers and even larger shadow inventory of off-market foreclosures are expected to grow in ranks as high levels of troubled loans are repossessed or subjected to short sale.
And consumer confidence is far from the only factor taking a hit from distressed sales. The S&P/Case-Shiller U.S. National Home Price Index posted a 4.1% decline in the first quarter of 2011, setting a new recession low. Year-over-year, the index declined 5.1%.
Prices in urban areas declined less, with S&P/Case-Shiller’s 10- and 20-city composites posting annual price drops of 2.9% and 3.6%, respectively, in March. The 20-city composite posted an new index low during the month. Washington, D.C., was the only metro area to post year-over-year gains on an annual basis.
“Home prices continue on their downward spiral with no relief in sight,” David Blitzer, chairman of S&P’s index committee, wrote in a press release.
Both the Federal Housing Finance Agency and CoreLogic home price indices also recently posted declines. However, according to David Goldberg, home building and building products analyst at UBS, the numbers are deceivingly pessimistic by lumping distressed sales in with non-distressed homes.
While the CoreLogic National House Price Index fell 3.0% between December 2010 and March 2011, if distressed sales were to be subtracted from the equation the index would have shown a price increase of 2.9%, Goldberg told Builder in an email.
Claire Easley is senior editor, online,at Builder.