Two new reports on the housing market show that sales of existing homes experienced a fourth consecutive month of growth, due mainly to seasonal strength, as the shadow inventory of distressed properties declined by 15.7%.
U.S. home prices increased by 0.9% in July in both the 10 and 20-city composites of the S&P/Case-Shiller Home Price Indices with data through July 2011. Of the 20 MSA's tracked in the survey, 17 experienced positive month-over-month increases in July, with only Last Vegas and Phoenix seeing declines, as Denver remained static.
On an annual basis, both the 10- and 20-city composites remained in negative territory at -3.7% and -4.1% respectively. Detroit and Washington DC stand as the only two MSA's with positive annual gains at 1.2% and 0.3%. Minneapolis, the worst performing MSA, drew back from three consecutive double digit annual declines to settle at -9.1%.
“Other recent housing statistics show that single-family housing starts were down slightly in August, and are about 2% below their year ago level; and these levels are at 30-year lows," said David Blitzer, Chairman of the index Committee for S&P Indices. "Existing-home sales, however, were up in August and are about 20% above their August 2010 level. The S&P/Experian Consumer Credit Default indices showed a continuing decline in mortgage default rates, a two-year trend. However, if you look at the state of the overall economy and, in particular, the recent large decline in consumer confidence, these combined statistics continue to indicate that the housing market is still bottoming and has not turned around.”
With data also through July, CoreLogic's quarterly Shadow Inventory Report indicated a decline in the current inventory of distressed properties to 1.6 million units, down from 1.7 million units in April 2011 and 1.9 million from the previous year. CoreLogic estimates that this inventory represents a 5 month supply.
The shadow inventory report tracks 90 day or more delinquencies, foreclosures and real estate owned (REO) properties that are not currently listed for sale through multiple listing services. The 1.6 million units are made up of 770,000 seriously delinquent, 430.000 in some stage of foreclosure and 390,000 that are REO.
Mark Fleming, chief economist for CoreLogic, said, “The steady improvement in the shadow inventory is a positive development for the housing market. However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”