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November 30th, 2010 (Modified on December 1st, 2010)

Housing: Two steps forward, two steps back

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Housing Market Trending Down While recent reports seem to indicate that our overall economy is growing at a decent pace (all things considered), one facet remains mired in seemingly-repetitive inconsistency: housing.

I know, no real surprise there. But it’s not as though housing indicators haven’t seen positive growth since the bubble burst — they have. It’s just that the periods of positive growth seem to always be canceled out by new negative reports.

The country’s GDP certainly isn’t growing by leaps and bounds, but it has shown some consistent signs of firming and even gradual improvement. Unfortunately, we can’t say the same for housing.

For example, according to Standard & Poor’s/Case-Shiller Home Price Index, existing home prices posted a 0.7 percent decline in September from the month prior, and a 0.6 percent decline from last year at that same time. Les Christie of CNNMoney.com adds that the latest quarterly home price figures are even worse, canceling out gains from the previous four out of the last five quarters:

U.S. home prices fell 2% in the third quarter after having gained steadily since early 2009.

The S&P Case-Shiller Home Price Index has recorded gains in four of the previous five quarters, including a 4.7% jump between April and June 2010. That leaves national home prices down 1.5% year over year and off 2% compared to the second quarter, according to the Index, which was released Tuesday.

Just as this year’s home price numbers turned negative in the third quarter after previous monthly gains, so did the figures represented in the latest housing survey conducted by Fannie Mae. Again, it’s the declines after the multiple positive reports that have left many of us so frustrated.

According to Fannie Mae’s national housing survey for the third quarter of 2010, consumer sentiments regarding housing declined after posting positive gains in the first half of the year:

Fewer Americans think it is a good time to buy a home (68 percent, down 2 percentage points since June) and more Americans think it is a bad time to buy (29 percent, up 3 percentage points). Similar to the last survey, an overwhelming majority of Americans believe it is a bad time to sell a home (85 percent, up 2 percentage points since June).

“Consumer attitudes toward buying a home are more negative since last quarter,” said Doug Duncan, Vice President and Chief Economist, Fannie Mae. “Our survey shows that Americans’ declining optimism about housing and their personal finances is reinforcing increasingly realistic attitudes toward owning and renting.”

When will consistently-positive expressions — that will mark a sustained recovery — return to housing? Not anytime soon, as far as I’m concerned. As far as home prices go, there are far too many delinquent mortgages, pending foreclosures, and vacant properties to provide any type of solid foundation for some time to come. As long as the housing reports continue to take two steps forward and two steps back, don’t expect consumer sentiment to make all that much forward progress either.

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3 Responses to “Housing: Two steps forward, two steps back”

  1. Tweets that mention Housing: Two steps forward, two steps back | HSH Financial News Blog -- Topsy.com Says: December 2nd, 2010 at 7:19 am

    [...] This post was mentioned on Twitter by HSH Associates, Mortgage News. Mortgage News said: [HSH] Housing: Two steps forward, two steps back – While recent reports seem to indicate that our overall economy is… http://ow.ly/1aeRuy [...]

  2. Garden Lakes Homes for Sale Says: December 3rd, 2010 at 7:41 am

    Informative post, the further downward pressure on home prices will hamper the economic recovery, raise foreclosures and hurt banks abilities to lend and likely tip the economy into another recession resulting in further job losses for the country…

    Faye

  3. Has the Housing Downturn Hit Bottom? | Atlanta Talks Real Estate Says: December 18th, 2010 at 12:31 am

    [...] Housing: Two steps forward, two steps back (hsh.com) [...]

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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