Optimism about the housing market is on the rise as well, an April 16 Gallup Poll found that 71 percent of Americans said that now is a "good time" to buy a house.
Case ShillerU.S. home prices fell a record 19.1% in the first quarter compared with a year earlier, according to the national Case-Shiller home price index released Tuesday.
On a month-to-month basis, prices in 20 selected cities fell 2.2% in March and were down 18.7% in the past year. Analysts said there was no evidence that a recovery has begun.
The S&P/Case Shiller U.S. National Home Price Index recorded a 19.1% decline in the 1st quarter of 2009 over the 1st quarter of 2008, the largest decline in the serie’s 21-year history. The 10-City and 20-City Composites recorded annual declines of 18.6% and 18.7%, respectively. Residential real estate continued at a steady decline in March, home prices are now at 2002 levels.
The number of homes under contract increased in March, according to the National Association of Realtors' Pending Home Sales Index, which increased 3.2 percent from February to March.
While this is good news, and we are in a bottoming process, the Economist points out that Robert Shiller, co-inventor of the index, compiled a version of the Case Shiller that stretches back over a century.
This 100 year index shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.
Jan Hatzius, the chief economist at Goldman Sachs, says that the “massive amount of excess supply” means that home prices nationwide will probably fall an additional 15 percent.
Much of the improving sentiment has to do with the end of a sharp downward spiral and not much to do with real economic recovery or an end to price declines, at least not yet.
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