House prices: Approaching a bottom?
In the paragraphs below, BCA Research provides its take on the latest U.S. housing data.
“According to the Case-Shiller data, U.S. house prices continue to decline, although on a short-term basis, the pace of declines has slowed.
“Case-Shiller house price indexes are about to breach the cyclical low, set in the spring of 2009. Unfortunately, the spring home buying season is getting off to a slow start according to survey data, implying that further house price declines are likely. With inventories – especially in the distressed property market – still very high, it will likely take more house price weakness before the market finally finds a floor.
“Nonetheless, there are some tentative signs that fundamentals are moving in the right direction. Foreclosure rates, while still high, appear to have peaked. Income and employment trends are gradually becoming more supportive, although lending conditions are still quite tight.
“Although we expect more weakness in U.S. existing home prices over the next several months, a turning point may be achieved by late 2011. Resolution of the ‘robo-signing’ foreclosure problems would be a strong positive for the housing market. We recommend keeping a close eye on foreclosure rates and total housing supply to indicate a sustainable stabilization in the residential real estate market.”
Source: BCA Research – Daily Insights Service, April 28, 2011.
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