US residential market falls not hit rock bottom yet
Residential property sales in the US have yet to hit the trough of the recession and prices are likely to keep falling before stabilizing in 2012, according to analysts.
Although new homes sales did increase 24% from May to June, at 330,000 it was the second lowest number recorded since 1963, the latest monthly market report from Capital Economics shows.
The increase only helped reverse less than half of the 37% plunge in home sales from April to May. And pending home sales fell another 2.6% in June from May after deteriorating 29.9% in May from April, the report also shows.
According to Capital Economics, this will be reflected in existing home sales in the months to come. Existing home sales in June fell by 5.1%. The company adds that pending home sales will do little to push home sale numbers higher. In fact, the number of pending home sales is so diminished, down 32% in the wake of the tax credit expiration, that existing sales will only dip in the coming months as these mortgage agreements are finalized.
Analysts at Moody’s Investors Service agree, stating that the odds of a near term double dip recession increased to one in four from one in five predicted this spring. If this double dip happens, Moody’s estimates home prices will fall along with sales by up to 20% before stabilizing in early 2012.
One good sign is that the number of foreclosure filings in the US in July dropped 9.7% from the same month last year, the second straight month of yearly declines, the latest report from RealtyTrac shows.
Chief executive James Saccacio said that default notices were down from the previous year for the sixth straight month in July as service providers and lenders have escalated repossessions (REOs) to near record levels.
In July 97,123 properties received a default notice, a 28% decrease from July 2009 but a 1% increase from the previous month. Default notices are down 32% from the 142,064 that peaked last April 2009.
Though there were 92,858 properties went back to the banks as REO in July, the second highest monthly total since RealtyTrac began tracking them in April 2005. It’s 1% below the peak in May when there were 93,777 REO properties reported.
Nevada holds the highest foreclosure rate of any other state for 43rd consecutive month with one in 82 houses received a filing in July, up 7% from the previous month but down 30% from the previous year.
Arizona held the second highest foreclosure rate followed by Florida and California. The metropolitan statistical areas (MSAs) are experiencing a ‘bumpy downward trend’, according to RealtyTrac. While those areas all showed decreases from last year in July, five of them had decreases from the previous month.
The Las Vegas-Paradise area saw a 9% increase from the previous month while filings in the Cape Coral-Fort Meyers, Florida area increased 21% from May and the Phoenix-Mesa-Scottsdale area had a 19% climb, the two biggest increases in the country.