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Housing Market Slow to Hit Its Spring Stride

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A flurry of recent housing data suggests that the market’s spring selling season is getting off to a slow start, a worrisome sign after a winter of expectations that warmer weather would rekindle growth.

Reports from local real-estate agent groups in some of the markets that were the first to rebound, including Las Vegas, Phoenix and San Diego, show year-over-year declines in March home sales. February data for pending home sales nationally—a barometer of early-spring activity—show a decline of 11% from a year ago.

And in markets around the country, fewer people are showing up at open houses. An index of home-buyer traffic in 40 U.S. markets compiled by Credit Suisse was down a little more than a third from March of last year. In some parts of the country, cold weather has put a damper on traffic.

New construction of single family homes is also increasing slowly, according to new data released Wednesday. New building permits for single-family homes in March fell 1.2% below the year-earlier level, the Commerce Department said Wednesday. New single-family home starts rose 1.9% from a year earlier.

“Overall, even after adjusting for weather, it has been worse than what most people expected,” said Tom Lawler, an independent housing economist in Leesburg, Va.

The sluggish start to the spring home-buying season—a crucial period for sales because families typically want to lock into a school district by the end of summer—comes as investors cut back on purchases of homes that can be rented or flipped for a quick profit. Meanwhile, potential buyers are still adjusting to a sharp rise in both home prices and borrowing costs over the past year. With prices and mortgage rates up, the nation’s median monthly home payment—including principal and interest—has risen 20% in the past year to about $900, according to John Burns Real Estate Consulting.

The slow spring so far is in some ways a testament to just how swift the past two years of recovery have been. There are fewer distressed properties like foreclosures, and prices of those that remain are higher, so investors are buying fewer homes. At the same time, there has been a continued increase in the number of nondistressed purchases made by ordinary buyers and families, further reducing the inventory of homes for sale.

That has allayed economists’ fears that the “shadow inventory” of unsold homes would choke off the recovery.

But there are now two trends at play that potentially could extend a springtime swoon into a summer slump: a dearth of properties for sale in some markets and an abundance of too-richly-priced homes in other markets.

A report released Tuesday by DataQuick, a San Diego research company, showed that Southern California home sales had their second-slowest March in two decades, as rising prices and a thin supply of homes damped sales.

Prices hit a six-year high—not just because buyers are bidding up the homes that are left, but also because there has been a shift away from the first-time home-buyer market to middle and higher-end sales, said Andrew LePage, an analyst at DataQuick.

In Phoenix, the supply of homes for sale is adequate, if not ample, but prices are keeping buyers at bay. There, sales of previously owned homes fell nearly 18% in March from a year earlier, while inventories rose 44% to a three-year high, according to the Arizona Regional Multiple Listing Service Inc.

Continue reading by clicking on the link provided below:

By: Dougherty, Conor & Timiraos, Nick.  “Housing Market Slow to Hit Its Spring Stride.”

WSJ.com.  Web: Housing Market Slow to Hit Its Spring Stride – WSJ.com.

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