The pace of the housing market’s recovery is starting to crawl as the key metrics show significant lag in improvement.
So the question remains, with a little more than half of 2014 left to go, could things get worse? Two major economists say they have the answer.
“On a year-over-year basis, improvement is kind of flat and has not turned around. The demand for home purchases is not that strong, and you can see that in the sales this season,” Freddie Mac Deputy Chief Economist Len Kiefer said in an exclusive interview with HousingWire.
“While the labor market started to get a little better, purchase applications are not, with weak purchase applications across many markets,” he added.
According to Freddie’s latest Multi-Indicator Market Index, the national MiMi value stands at -3.06 points, showing a weak housing market overall with only slight improvement from February to March and a 3-month flat trend.
A year ago the MiMi stood at -3.72. So while there is some improvement going into summer, the extended 2013 winter indicates a destabilizing impact which will drag through the rest of this year.
“We will have to try hard to reach 2013 levels but will likely end up below,” Kiefer said. “Last year was not great, and it is still weak in most states. We are coming off of a depressed housing market, so in order to get back to a sustainable, stable range of activity, this stalling is bad.”
Looking ahead, Kiefer explained that Freddie had to revise the May outlook down. While things have improved, they have not improved at a pace that equals last year’s pace.
“In June our forecast will probably be down even more, not significantly, but not improving like what we would like to see in a robust recovery,” he said.
Amy Crews Cutts, chief economist at Equifax, expanded saying, “The recovery is moving pretty much like it has all along – frustratingly slow, with a lot of volatility, and highly reflective of local labor market conditions.”
Crews Cutts stated that so far, the early 2014 data doesn't indicate reason for worry given the horrible weather in February and March, but once the real summer buying season starts, the market will have a better view of whether consumers are changing direction.
“Although 2013 was a good year in terms of improvement, the level of improvement in most markets for the remaining 40 states will still be weak until it can get the broader macro economy moving and job growth that will fuel home sales and the recovery,” Kiefer added.
“We still have a ways to go and stalling out is a bad sign,” he said.
But a bit of good news: although many markets remain weak, all but one state and one metro are showing improvement versus last year and none are showing signs of rapid declines, said Crews Cutts.
“I think, and hope, that once we get clear of all the effects of the bad weather that the data will show increased interest in homebuying – both the expected pick up and a bit extra making up for what should have happened earlier in the year,” Crews Cutts said.