Dragged down by such anchors as a bulging pipeline of foreclosures and a dearth of buyers, it will be many more months – if not years – before a housing market rebound takes hold.
Symptoms of the limping U.S. economy, primarily an unemployment rate above 9% and weak consumer confidence, along with much stricter lending rules, have helped keep buyers scarce.
Meanwhile, the massive number of foreclosed properties on the market – more than a quarter of U.S. residential sales – keeps pushing prices down. That, in turn, has driven more homeowners into negative equity, further scaring prospective buyers and making new homes much more expensive by comparison.
Report after report tells the story of a market mired in a five-year slump that just can't seem to find any traction.
"Year-over-year, prices continue to deteriorate, although there has been a seasonal uptick over recent months," Stuart Gabriel, director ofUCLA's Ziman Center for Real Estate, told the Los Angeles Times. "This reflects a market that continues to be in search of a bottom."
The benchmark Standard & Poor's /Case-Shiller Index illustrates the market's persistent malaise. The May measure of home prices in 20 metropolitan areas rose a lackluster 1% from April – and was down 4.5% from a year ago.
Even the meager 1% monthly increase resulted from a seasonal caveat – prices usually rise in the spring. Analysts foresee little improvement in the months ahead.
"Things do not look very favorable on the housing front since the employment situation has taken a turn for the worse in May and June," Chris G. Christopher Jr., an economist with consulting firm IHS Global Insight, wrote in a research note. "The unemployment rate now stands at 9.2%, and consumer confidence is at depressed levels. Going forward, the Case-Shiller indexes are likely to post increases during the home-buying season, and then turn down again."
Similarly, the annual sales rate of new homes fell 1% from May to June, but was up 1.6% year-over-year. And the actual number – 312,000 – disappointed economists who had expected a rate of 320,000.
To really put those numbers in perspective, consider that at the peak of the housing bubble, July of 2005, the annual sales rate was a robust 1.3 million.