The rate of price declines is reaching the leveling off point this year, even as the the flow of foreclosed homes to market will probably accelerate following a Feb. 9 settlement between the five largest mortgage servicers and state attorneys general over their methods for repossessing homes, said Paul Dales, an economist with Capital Economics Ltd. in London.
"The bottom is behind us," said Dales, top ranked for his home-price estimates by Bloomberg. "I don't think we will return to anything like the exceptional booming market we had five years ago. We will have a very steady, slow recovery but a recovery nonetheless."
After falling two years ago to the lowest level since records were kept in 1947, household formations may hit 1.2 million this year, de Bruin said. New households will help absorb the so-called shadow inventory of homes that are vacant or facing foreclosure, and fuel demand for construction of new apartments and houses in areas with growing populations.
Existing Sales Rise
Existing home sales reached their fastest pace in 20 months in January and more Americans than forecast signed contracts to buy, according to the National Association of Realtors.
In a sign that demand may be catching up with supply, the inventory of homes listed for sale fell to 6.1 months, down from a peak of 12.1 months in July 2010 and the lowest level since April 2006, when the real estate bubble was nearing its crest, the Chicago-based Realtors group said.
Banks loosened standards on both prime and nontraditional loans such as adjustable-rate mortgages in the third quarter of 2011 for the first time since at least 2007, the Federal Reserve reported Nov. 7 in its survey of senior loan officers. An increased number of banks reported stronger demand in the fourth quarter, when lending standards didn't change, the Fed reported Jan. 30.
Banks Come Back
"We are seeing early signs of the banks being willing to come back on a very selective and limited basis," said Barry Rutenberg, a Gainesville, Florida, builder who is chairman of the National Association of Home Builders. "We are starting to see it loosen up just a little bit. This is the very beginning of this. Let's not get carried away with euphoria. It is generally loosening up."
New single-family home sales beat analysts' expectations in January and sales for December and November were revised upward, the Commerce Department reported Feb. 24. Last year, new home sales declined to a record low of 304,000, according to department records dating to 1963.