Housing market psychology still fragile
A sign sits in the front yard of a home being offered for sale in Pleasant Prairie, Wis.
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Kai Ryssdal: You've got your used home sales. You've got your new homes sales. But if you really want to get a sense of the American housing market, Case Schiller is the index for you. It tracks the rise and fall of home prices in 20 big metro areas across the country. The December version came out this morning. And the trend lines seem to go every which way depending on how you slice things.
So we asked Marketplace's Mitchell Hartman to walk us through it.
MITCHELL HARTMAN: When you look at the numbers year over year, home prices are down about 3 percent. Not great. But just a year ago, prices were down 20 percent. And every month, prices are inching up, says David Blitzer of Standard & Poors.
DAVID BLITZER: We're settling into steady, modest gains.
Blitzer says buyers and sellers are starting to believe the price slide is over, and adjusting their behavior accordingly.
BLITZER: When prices were plunging, the buyers were looking around, not wanting to smile too much, and saying, you know, "If I wait a couple of months, it may be cheaper, I'm not in a big rush." Slowly but surely, I think the buyers are beginning to say, "Maybe I gotta take this deal."
This new market psychology is still fragile. Housing economist Patrick Newport at IHS Global Insight warns there are several factors that could knock prices back again, like the expiration of a tax credit for first-time home buyers, and a fresh wave of foreclosures.
PATRICK NEWPORT: Right now the number of homes that are vacant and for sale is at a record high. When you have too much supply, prices tend to drop. So I think going forward, prices are much more likely to drop than go up.
The Case-Shiller report shows home prices have kept falling by double-digits in Las Vegas, Detroit and Tampa. But they're steadily rising now in San Francisco, Los Angeles, Dallas, Denver, and Washington, D.C.
I'm Mitchell Hartman for Marketplace.