(Bloomberg News) The U.S. housing market is showing more signs of stabilization as price declines ease and home demand improves, spurring several economists to call a bottom to the worst real estate collapse since the 1930s.
"The crash is over," Mark Zandi, chief economist for Moody's Analytics Inc. in West Chester, Pennsylvania, said in a telephone interview yesterday. "Home sales -- both new and existing -- and housing starts are now off the bottom."
Data released yesterday showing better-than-estimated new- home sales and a slowdown in price declines are bolstering optimism that the market is poised for a sustainable recovery. Economists including Bank of Tokyo-Mitsubishi UFJ's Chris Rupkey, Bank of America Corp.'s Michelle Meyer and Mark Fleming of CoreLogic Inc. are also predicting prices are close to a trough after a 35 percent slump from a July 2006 peak, even as the threat of more foreclosures loom to boost supply.
Values in 20 U.S. cities fell 3.5 percent in February, the smallest 12-month drop since February 2011, the S&P/Case-Shiller index showed yesterday. The Federal Housing Finance Agency's home-price index, which measures properties with mortgages backed by Fannie Mae or Freddie Mac, had a 0.4 percent rise for the same period, according to a separate report.
New homes sold at an annual pace of 328,000 in March, up 7.5 percent from a year earlier, the Commerce Department said. The median estimate in a Bloomberg News survey forecast a rate of 319,000. The pace of sales for February was revised upward to 353,000, a two-year high.
A report on consumer confidence yesterday showed the most important signal that housing can only go up, said Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi in New York. The Conference Board said its confidence index was at 69.2 in April, compared with a revised 69.5 in March. Beneath the headline number, an important indicator was that consumers said jobs are easier to find, Rupkey said.
"Today's consumer confidence shows labor markets recovering and that confidence is going to allow consumers to go out and buy homes," Rupkey said in a telephone interview yesterday.
The National Association of Realtors probably will say tomorrow that the number of Americans signing contracts to buy previously owned homes rose 1 percent in March, according to the median estimate of 43 economists surveyed by Bloomberg. That would put the pending home-sales index close to a two-year high.
Foreclosure Supply
While the volume of sales has increased, prices still have a way to fall because as many as 6 million homes with delinquent mortgages and in the foreclosure process are likely to come to the market, Scott Simon, head of mortgage- and asset-backed debt at Newport Beach, California-based Pacific Investment Management Co., said yesterday on Bloomberg Television.