According to the S&P/Case-Shiller composite index of 20 metropolitan areas, home prices declined 0.2 percent in March from February. The report shows prices are at mid-2002 levels and slipped in 18 of the 20 cities tracked. Despite a slowly recovering economy, home values are under pressure from excess inventory, particularly in cities that suffered badly from high unemployment and the foreclosure crisis. The Case-Shiller index measures sales prices of homes in select cities compared with January 2000. The index offers a three-month moving average price. More here.
Pending home sales fell in April after two consecutive months of gains. According to the National Association of Realtors’ Pending Home Sales Index, pending sales, which reflect contracts not closings, dropped 11.6 percent from March. Lawrence Yun, NAR’s chief economist, said the economy hit a soft patch in April due to sharply rising oil prices, severe weather, and a rise in unemployment claims, which may have caused the dip in contracts. Yun believes the decline is due to temporary factors and, even with favorable affordability conditions and pent-up demand, the housing recovery will continue to be uneven. More here.
In his latest economic outlook report, Fannie Mae’s chief economist, Doug Duncan, forecasts a modest improvement in housing activity this year. Though the number of distressed homes on the market continues to put pressure on prices, Duncan writes that high housing affordability and still-low mortgage rates should help lift the market in the second half of the year. He is forecasting a 6 percent increase in existing-home sales this year and expects the median price to finish 2011 at $163,600. Duncan believes mortgage rates will rise slightly but remain historically low, which along with improvement in the labor market, should lead to positive gains for housing. More here and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage loan applications increased 1.1 percent last week from the week before. The Refinance Index rose to its highest level since December 10, 2010, increasing 0.9 percent. The seasonally adjusted Purchase Index gained 1.5 percent from a week earlier. Mortgage rates were also up, with the average contract interest rate for 30-year fixed-rate mortgages increasing to 4.69 percent from 4.60 percent the week before. More here.