U.S. Home Prices Drop 1.6% in Second Quarter From Year Earlier, FHFA Says
Aug. 25 (Bloomberg) -- Michael Feder, chief executive officer of Radar Logic Inc., talks about U.S. home prices and the outlook for the housing market. U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale. Sales of new homes unexpectedly dropped in July to the lowest level on record. Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since data began in 1963, according to the Commerce Department. Feder speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Aug. 25 (Bloomberg) -- Bloomberg economist Joseph Brusuelas discusses July U.S. new home sales, which fell 12 percent from June to an annual pace of 276,000, the lowest level on record. Brusuelas, speaking with Margaret Brennan on Bloomberg Television's "InBusiness," also discusses durable-goods orders data and Federal Reserve policy outlook. (Joseph Brusuelas is a Bloomberg economist. The opinions expressed are his own. Source: Bloomberg)
U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale.
The annual drop followed a 3.2 percent decline in the first quarter, the Federal Housing Finance Agency said today in a report. Prices rose 0.9 percent from the prior three months, according to the Washington-based agency, which measures sales of homes with mortgages backed by Fannie Mae or Freddie Mac.
Foreclosures are boosting the supply of properties on the market and undercutting the confidence of homebuyers, sapping demand even as mortgage rates tumble to record lows. The U.S. inventory of homes for sale averaged 3.89 million during the second quarter, the highest since 2008, according to data from the National Association of Realtors.
“As long as foreclosures keep coming on the market, it’s unlikely we’ll see a strong rebound in housing prices,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York.
A record 269,962 U.S. residential properties were seized by lenders in the second quarter, according to RealtyTrac Inc. Foreclosures probably will top 1 million this year, the Irvine, California-based data company said in a July 15 report.
Unemployment averaged 9.7 percent during the second quarter, near the 10 percent rate in 2009’s final three months that was the highest since 1983, according to the Bureau of Labor Statistics. Joblessness boosts the number of foreclosures as mortgage holders fall behind on payments. It also reduces the number of people who are eligible to get home loans.
Record Low Rates
Mortgage rates for a 30-year fixed loan fell to 4.42 percent this month, the lowest since McLean, Virginia-based Freddie Mac began keeping records in 1971. The rate probably will average 4.7 percent this year and next, according to Washington-based Fannie Mae, Freddie’s larger rival.
Purchases of existing homes plunged 27 percent to a 3.83 million annual rate in July, the slowest since comparable records began in 1999, according to Chicago-based NAR. Sales of new homes unexpectedly dropped last month to the lowest level on record, the Commerce Department said today.
Federal Reserve policy makers on Aug. 10 said the U.S. economic expansion probably will be “more modest” than earlier anticipated, citing the housing market as one of the reasons. The Fed has held the target for its benchmark lending rate near zero since December 2008.
“Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit,” the Fed said in a statement. “Housing starts remain at a depressed level.”
Today’s FHFA report measures changes in real estate values using repeat data on individual properties. It doesn’t include a dollar value for homes. The U.S. median home price was $176,900 in the second quarter, according to NAR.
To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.
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