If I do this long enough, I may one day be able to write that housing prices are rising. Today ain’t that day.
Freddie Mac released their Conventional Mortgage Home Price Index for the third quarter of 2010 today. Freddie found that home prices fell 1.9 percent from the second quarter to the third quarter (earlier today S&P/Case-Shiller said that prices fell 2.0 percent in the third quarter). Freddie also said that home prices are down 3.1 percent year-over-year.
Housing prices declined in 8 out of 9 Census Divisions year-over-year as well as quarter-over-quarter. The only area to experience increasing prices was the New England area, with a 0.3 percent quarterly increase and a 1.1 percent annual increase.
The awesomely named Amy Crews Cutts, Freddie Mac deputy chief economist commented:
“Home sales in the third quarter declined from the second quarter, in part because of the expiration of the home-buyer tax credit. Although sales rose in August and September, the net decline over the quarter was still large. We’re now seeing the effect of the sales slow-down in home purchase prices”.
As I (and many others) have said over the past several months here, the chief problem is that there as an overwhelming supply of homes on the market (4.2 million in “visible supply” and 2.1 million in shadow inventory, according to Core Logic), and a totally underwhelming demand for these houses. Econ 101 tells us that a lot of supply + little demand = declining prices. It really is that simple, and until the employment situation turns around and allows people to start buying homes again, downward pressure on prices will persist.
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