The double-dip in home prices that began two years ago continued through the third quarter of 2011, according to the Fiserv (FISV) Case-Shiller Indexes released Monday. However, there are signs of a recovery for 2013.
The indexes projects average U.S. home prices will drop another 1% in 2012, and that increased home sales and improved economic conditions should contribute to a 3.8% increase in 2013.
Nationally, the indexes show home prices fell in 337 of the 380 metro areas tracked in the third quarter from the prior quarter and year-earlier period. The average price of a U.S. home fell to a new post-bubble low, declining 3.9% from a year ago. Average home prices are now 33% below the 2006 peak, with broad weakness across the U.S.
David Stiff, chief economist at Fiserv, pointed to encouraging trends in the U.S. housing market.
“While prices continued to fall in most markets, sales activity picked up at the end of 2011, setting the foundation for price stabilization in 2012,” Stiff said. “We stand by our projection that average U.S. home prices will move sideways in 2012. But we do anticipate that increasing sales activity will begin to drive small increases in prices in as many as half of U.S. metro areas.”
Stiff said some larger metro areas that escaped the worst of the home price bubble, such as Houston, Fort Worth, Texas, and Salt Lake City should expect increases of 1% to 3%. Many smaller metro areas, such as Boise, Id., and Albuquerque, N.M. are forecast to see increases of 4% to 6%.
However, the recovery in such markets is not expected to be broad enough to move the national average this year. Fiserv Case-Shiller projects that average U.S. prices will decline another 2.7% by the third quarter of 2012, compared to the year-ago period, before rising 3.8% by the third quarter of 2013.
Stiff recognized the bounce-back in consumer confidence and auto sales after stalling in the summer, indicating an increasing willingness of consumers to purchase big-ticket items.
“If the job market continues to improve, then the rebound in consumer confidence will be sustained this year and more households will be willing to purchase the biggest ticket item, a house,” he said.
On Tuesday, the S&P/Case-Shiller home price indexes for November are released and The Conference Board releases the consumer confidence index for January.
Write to Justin T. Hilley.
Follow him on Twitter @JustinHilley.