NEW YORK (TheStreet) - Home prices are expected to drop 1.6% in the fourth quarter of 2011, and fall another 3.2% in the first quarter of 2012, according to Clear Capital's home data index.
Even so, Clear Capital projected that national home prices at the end of the first quarter of 2012 will be comparable with those at the end of the first quarter of 2011, which were the lowest since the housing market downturn began. "The housing market has yet to demonstrate the fundamentals necessary to overcome a seasonal slowdown over the next six months, which drives our projected 3.2% drop in national home prices through the first quarter of 2012," said Alex Villacorta, director of research and analytics at Clear Capital.
"The normally positive market forces of record low mortgage rates and near record lows in home prices are being offset by high unemployment rates and general consumer pessimism about the economic future," Villacorta added. "Until we experience a more stable economic environment, I expect home prices to remain relatively flat or slightly down for the foreseeable future."
Clear Capital concluded that "record low mortgage rates and a wide selection of affordable homes has yet to counteract the negative pull of distressed sales and stubbornly high unemployment. The net effect of these counter forces places the housing market in a suspended state with price movement limited to a standard seasonal ebb and flow." Falling home prices have done little to spur potential buyers. Data released late last month showed that sales of newly built homes fell 2.3% in August to a six-month low. A report released earlier in September showed that homebuilders began construction on 5% fewer homes in August, a weaker-than-expected rate, though applications for building permits rose 3.2% to the highest rate this year pointing to the possibility for some sense of stabilization in the home construction market.
Stocks in the homebuilder sector were mostly higher Thursday, though the SPDR S&P Homebuilders ( XHB) and iShares Dow Jones US Home Construction, ( ITB) exchange-traded funds that track the sector, remain around 70% and 80%, respectively, off their early 2006 peaks. Among individual builders, D.R. Horton ( DHI) added 1%, Toll Brothers ( TOL) gained 0.4%, PulteGroup ( PHM) rose 2.8% and Lennar ( LEN), largely considered a leader among the homebuilders, picked up 2.6%. -- Written by Miriam Marcus Reimer in New York. >To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to @miriamsmarket. >To submit a news tip, send an email to: email@example.com.
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