Although recent data have triggered some cautious optimism, a report released today indicates that a recovery in the housing market is still far from a reality.
The National Association of Realtors reports that pending sales of existing homes fell nearly 2 percent in February from January and dropped more than 21 percent from a year ago.
The [Pending Home Sales Index] in the Northeast rose 3.2 percent in February to 71.8 but remains 25.4 percent below a year ago. In the Midwest, the index declined 3.7 percent to 82.7 and is 17.4 percent lower than February 2007. The index in the South fell 5.5 percent in February to 85.0 and is 30.3 percent below a year ago. In the West, the index dropped 9.8 percent in February to 84.6 and is 17.1 percent below February 2007.
Full release here.
Joseph Brusuelas, the chief U.S. economist at IDEAglobal, says house prices have still further to fall.
Although the data in the housing sector over the past few months gave the impression of a bottoming out of the market on the back of reduced rates for conforming loans and price declines just about across the board, we have been making the case that calls of a market bottom are premature. The February data not only confirms that, but when one takes into account the coming wave of foreclosures, supply will continue to increase and prices will continue to decline throughout the remainder of the year and well into 2009. That will serve as a rational deterrent from individuals re-entering the market in any substantial fashion in the short run.