Home Prices Show Signs of Weakening
June 10, 2010
Housing prices have come back from their rock-bottom lows, but they're showing signs of renewed weakening with the ending of the federal home buyer's tax credit and the growing number of foreclosures, according to the S&P/Case-Shiller Home Price Indices released this week.
Although it remained above its year-earlier level, the US National Home Price Index fell 3.2% in the first quarter of 2010 over the previous quarter. Thirteen metropolitan areas included in the index saw prices drop from February to March, and Boston remained flat.
"It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices," Index Committee Chairman David M. Blitzer said in a media statement Tuesday. "Now that the tax incentive ended on April 30, we don't expect to see a boost in relative demand."
Mortgage Rates Drop Again
Combined with ultra-low mortgage rates, low home prices are good news for first-time buyers with money in the bank for down payments, jobs, and confidence to buy. Freddie Mac's recent weekly survey ending May 20 showed 30-year fixed mortgage rates averaging 4.84%, with an average 0.7 point, the lowest level all year and only slightly above the 4.82% average one year earlier.
Meanwhile, the Conference Board says its consumer confidence index rose to 63.3 in May, up from 57.7 in April--the third monthly increase this year.
But high jobless rates and rising foreclosures continue to plague the housing market. An estimated 11 million homeowners are underwater on their mortgages, and a whopping 75% of properties are underwater in Las Vegas, Nevada, the hardest hit housing market in the country, according to data from research firm CoreLogic.
