The spring housing market is still about a month away, but industry experts are already arguing its outcome. New reports offer very different views on both headwinds and tail winds. Overall economic conditions, everything from job growth to cheap gas, could help home sales. But still high home prices, tight credit conditions and low supply all stand in the way.
“The housing recovery is barely on first base,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “Prospects for a home run in 2015 aren’t good.”
Blitzer made those comments in a monthly report on home prices from S&P/Case-Shiller, which showed home price gains had eased in November 2014 (a three-month running average ending in November). The strongest gains were limited to California, Florida, the Pacific Northwest, Denver, and Dallas, while the rest of the country is lagging the national average.
A more current report, however, gauging January sales and prices, was more optimistic. Real estate brokerage Redfin says home prices are 7.6 percent higher in January from a year ago (at least according to sales in the first three weeks of the month). It also says home tour demand among its listing hit an all-time record last week, with the number of customers requesting tours up 62 percent from a year ago.
The numbers may be juiced by better news in the mortgage market. Not only are interest rates near record lows, but the FHA, the government insurer of home loans, lowered its annual premiums Monday by half a percentage point, which it estimates saves the average borrower about $900 a year.
“If prices go up too far too fast, buyers will step back and wait for them to drop again,” said Richardson. A steep jump in prices in 2013 caused sales to fall backward in 2014, according to the National Association of Realtors, which recently reported full-year 2014 sales 3 percent below 2013.