Rise in sales, dip in prices spell US realty recovery

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New York: It is a little too early to celebrate new life in the housing market, but Americans should soon have something to party about if the spring housing season is any gauge.

With sales rising and home price declines moderating in many regions of the country, the hard-hit US housing market is showing some signs of stabilisation.

“The long and painful crash in the housing market is coming to an end,” said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.

However, analysts said bumps in the road remain for any sustained recovery as a frenzy of foreclosures loom large in the residential real estate market. Economists believe a steadier US housing market—in the midst of its worst downturn since the Great Depression —is key to a turnaround.

April’s home price data was one of the more encouraging signs of late. The Standard & Poor’s/Case-Shiller Home Price Indices showed the annual decline of the 10-city and 20-city composite indexes improved, though prices are still falling.

On a month-over-month basis, S&P’s index of 20 metropolitan areas showed home prices fell just 0.6% in April versus the 2.2% decline the prior month. Eight areas showed gains on a month-over-month basis, the most since June 2008.

David M Blitzer, chairman of the Index Committee at Standard & Poor’s in New York, said the market is improving, but cautioned against reading too much into one month’s data.

“Some gains, however, can be chalked up to seasonal factors, so it may be too soon to call a recovery,” he said.

Moody’s Economy.com’s Zandi said national home sales and housing starts have already hit bottom, but expects an additional 5 to 10% decline in prices. Prices could continue to fall until spring 2010, after already falling by 40% from their peak.

The government’s $8,000-tax credit, part of the stimulus bill, for first-time home buyers, boosted sales this spring, the peak home buying season, particularly in the Northeast.

Massachusetts Association of Realtors President Gary Rogers, a broker at RE/MAX First Realty in Waltham, Massachusetts, said spring showed a pick-up in activity, especially among first-time home buyers, with multiple offers on homes.

“While sales have been down compared to last year, we’ve seen a steady increase in the number of sales and median home prices on a month-to-month basis,” he said. “This steady climb gives us reason to be hopeful that we’ll continue to move in a positive direction.”