By Ryan Jackson
U.S. home prices showed two consecutive months of increases in March and April for the first time since the summer of 2010 when the market benefitted from the federal tax credit for home buyers, according to CoreLogic.
The firm’s Home Price Index rose 1.1 % year over year in April for the two month period, the first rise since the artificial government imposed tax credit drove home sales to the highest level since the real estate crash. The price increase demonstrates a significant change for the housing market, which is struggling to recover from the worst downturn since the Great Depression.
Single family home construction also rose 2.3% in April, and is up 25% in the past six months, despite a lack of workers in the industry going back to build homes, according to government figures.
The supply of homes listed on the market for sale also fell to just slightly more than six months, and is currently at the lowest level since the housing crisis started more than five years ago when real estate sales collapsed. The drop in inventory should propel a housing recovery in many regions of the country that have been held back from entering a recovery.
However, a massive supply of homes whose owners have defaulted on their mortgages, estimated at 1.4 million, and homes that have not been formally repossessed by mortgage servicing companies in the shadow inventory pose an even greater threat to the housing recovery. But those homes are expected to be gradually placed on the market for sale in coming months and years by bankers slowly listing the properties in an effort to engineer a recovery in home prices.
The supply of foreclosed properties also includes more than 1 million homes held by Freddie Mac, Fannie Mae and Ginny Mae, which government leaders hope to sell off in bulk to investors at cheaper discount prices. The sell off would resemble the discount bulk sales that took place during the Savings and Loan Crisis in the 1980s but are being orchestrated by the government to be pulled off with much less publicity.
The losses will still, however, be footed by U.S. tax payers as bankers hope to push home values higher without flooding the marketplace with an over supply of inventory.
Record low mortgage rates and discount priced distress sales, including short sales should offer the supply of properties consumers are seeking as they search for deals to purchase.
Excluding distress sales, home prices increased 1.9% in April on a year over year basis, but there was no change in March.