Since the subprime mortgage meltdown a few years ago and the economic downturn that hindered much of the United States, the housing market still remains a kick in the head, and as the Wall Street Journal’s MarketWatch writes, it “still isn’t all fine and dandy.” A phalanx of recent housing data has perhaps thrown cold water onto the notion that the housing market is getting better.
Pending home sales drop
In the month of June, fewer Americans failed to sign on the dotted line to acquire previously-owned homes, a fact that surprised many considering that some industry professionals forecast quite the opposite.
According to a report from the National Association of Realtors, the index of pending home sales fell 1.1 percent in June after soaring six percent during the month prior. Housing analysts cited a lack of credit and stagnant wages as possible reasons that deterred prospective buyers from taking a dip into owning a home.
Thirty-nine economist surveyed by Bloomberg predicted home sales would grow 0.5 percent. Nevertheless, though, they say accelerated employment gains and a larger number of available homes to buy may be needed to jumpstart the housing market yet again.
“Housing is a significant question mark, while many other sectors of the economy seem to be performing adequately,” said Louis Crandall, chief economist at Wrightson ICAP LLC before the report was released. “There are a variety of reasons behind the sluggish growth in the industry, ranging from credit availability to finances to just general attitudes about housing.”
Housing prices decline in May
Whether this is good news or bad news depends on the reader’s position, but The S&P/Case Shiller composite index of 20 metropolitan areas highlighted that single-family home prices in the month of May (seasonally adjusted) weakened by 0.3 percent.
A Reuters poll of economists projected that home prices would jump by 0.2 percent.
Non-seasonally adjusted housing prices improved 1.1 percent, though it was projected to increase 1.5 percent.
“What I find particularly interesting is that on a seasonally-adjusted basis, nationally, home prices are falling only a smidgen—three-tenths of one percent—but the way these markets go, that could possibly be a turning point,” said economist Robert Shiller in an interview with CNBC.
He added that something is concerning consumers from plunging into the housing market, citing the geopolitical tensions afflicting certain parts of the world as a potential reason.
Housing sends stocks down
During the Monday trading session, major U.S. stock market indexes fell amid the weak housing data and the paucity of wage growth. The Standard & Poor’s 500 index dropped 0.2 percent, the Dow Jones Industrial Average lost 0.2 percent and the Nasdaq declined 0.4 percent.
However, financial analysts say this isn’t necessarily a good thing because it shows that the market isn’t caving into the negative news so rapidly.
“I think the market is doing what it should be doing,” Robert Pavlik, chief market strategist at Banyan Partners, a wealth management firm, told the Associated Press. “It’s not getting sucked into all the bad news out there. Russia is lobbing bombs into Ukraine, and that appears like it could spiral out of control. The Middle East looks out of control. But the stock market is trading near an all-time high.”
Foreclosure activity drops to lowest level
Despite all of the negative housing data, there is still one piece of good news left: foreclosure activity in the U.S. hit its lowest level in eight years. RealtyTrac, a foreclosure sales and analytics company, found that 107,194 U.S. properties had a foreclosure filing in June, the smallest number since the pop of the housing price bubble in Jul. 2006.
Industry experts say the trend should continue over the next few years and foreclosure statistics are likely to flatline.
