After a record-breaking month for the Atlanta residential real estate index, the sizzling summer is beginning to simmer, as data and analysts believe that recovery is showing signs of stalling. The July Cal-Culator posts a 6.1 rating, a 0.1-drop from the previous month. Though foreclosures continue to drop and builder confidence levels continue to increase, price growth, home sales and housing production have slowed.
The South lagged behind the rest of the country in new home starts, bringing down the national average significantly, according to the U.S. Census Bureau News by the U.S. Department of Housing and Urban Development. The South experienced a nearly 30 percent drop in June from May while the national rate fell 8.1 percent.
“The numbers are a little disappointing, but May was unusually high and some pull back isn’t completely unexpected,” said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del. “Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand.”
The latest S&P/Case-Shiller Home Price Indices data, released July 29, revealed that U.S. home prices increases are slowing. The 20-City Composite (where Atlanta is included) increased by 9.3 percent, which is “down significantly from the 10.8 percent returns reported last month.” However, Atlanta was one of nine cities that posted double-digit increases as the city experienced an 11.2 percent increase from the previous month. Unfortunately, Atlanta posted a year-to-year decline.
“Housing has been turning in mixed economic numbers in the last few months. Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “At the same time, the broader economy and especially employment are showing larger improvements and substantial gains.”
However, Zillow believes that this data is a sign of a slowing recovery, rather than large improvements.
“Nationally, today’s Case-Shiller data is consistent with the slow glide-path down towards a more normal housing market we’ve been experiencing for the past few months,” said Stan Humphries, Zillow’s chief economist in Forbes.
Nationally, new single-family home sales fell 8.1 percent in June from May, according to new data by the U.S. Department of Housing and Urban Development. The South posted a -9.4 percent month-over-month drop and a -17.4 percent year-over-year decline.
As stated in last month’s column, any number over 50 on the NAHB and Wells Fargo Housing Market Index indicates that the majority of homebuilders view conditions as “good” rather than “poor.” July was the first month since January that builder confidence rose above 50, reaching 53.
CoreLogic’s National Foreclosure Report for June revealed that the foreclosure inventory was down 3.9 percent in June from May, marking 32 months of continuous decline, and completed foreclosures decreased 9.9 percent year-over-year. However, economists are still reminding consumers about the long road ahead.
“While 32 straight months of year-over-year decline in the foreclosure rate is cause for celebration, the total number of homes still in the foreclosure process remains almost four times as high as the average in the early 2000s,” said Mark Fleming, chief economist for CoreLogic.
The next Cal-Culator will be released September 9 and will hopefully reflect a reigniting of the industry.