Atlanta Housing Industry: Two Steps Forward, One Step Back
After a year of significant progress in the housing industry with strides made in increased inventory, reduced foreclosures and rising home prices, the final month of 2014 didn’t provide many boosts for the Atlanta residential real estate market. The Cal-Culator, Atlanta’s residential real estate index, dropped 0.2 to a 6.0 due to declines in three dominant, telling factors: existing-home sales, housing starts and home prices.
Existing Home Sales
In October, existing home sales propelled the housing industry forward as sales hit their highest level of the year. Unfortunately, the momentum proved short-lived with the industry taking a step backward the following month. Existing home sales slid 6.1 percent in November, according to the latest data released by the National Association of Realtors.
“Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” said NAR chief economist Lawrence Yun. “The stock market swings in October may have impacted some consumers’ psyches and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”
The U.S. Department of Housing and Urban Development found that privately-owned housing and single-family starts both declined from October to November. Privately-owned housing starts fell 1.6 percent from the previous month and 7 percent from the previous year, while single-family starts fell 5.4 percent from the previous month. Housing completions also fell 6.4 percent in November. The South posted a drastic 10 percent drop in privately-owned housing starts from the previous month and a 4.1 percent drop from the previous month.
Home Price Deceleration
The industry is showing improvements on a yearly basis when it comes to home prices, but the prices are not building on the previous month’s successes. Home price deceleration continues to cripple the nation, according to data released by the S&P/Case-Shiller Home Price Indices on December 30. However, experts are optimistic entering into 2015.
“After a long period when home prices rose, but at a slower pace with each passing month, we are seeing hints that prices could end 2014 on a strong note and accelerate into 2015,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. Two months ago, all 20 cities were experiencing weakening annual price increases. Last month, 18 experienced weakness. This time, 12 cities had weaker annual price growth, but eight saw the pace of price gains pick up.”
Despite the index’s drop from the previous month, the beginning of 2015 is still shining brighter than last year’s kickoff column. A year ago, the column rose 0.4 to stand at 5.5 – a significant 0.5 difference from this month’s index. Atlanta’s housing recovery seems to be falling into a “two steps forward, one step back routine.” In the lending industry, we have faith that steadily the Atlanta housing industry will hit prerecession levels in terms of housing activity.
To monitor Atlanta’s progress in the housing industry, please be sure check The Cal-Culator the second Tuesday of every month. The January Cal-Culator, to be released on February 10, will reveal how the housing industry fared in the first month of the New Year.