In housing, there may be a rising tide, but it isn’t lifting all boats. According to data released today by the Federal Housing Finance Agency, prices were up 0.3% in February from the month before on a seasonally adjusted basis. Even better, prices in February were up 0.4% compared to a year ago, marking a pronounced turn in the market, since it’s the first time the FHFA index has risen year-over-year since July 2007. The numbers would seem positive if it weren’t for the fact that the S&P/Case-Shiller index, the other major housing price report, came out an hour before and was lousy.
Prices in 15 cities in the 20-city index were down from the previous year, leading to headlines like CNBC’s “U.S. Home Prices Drop for Sixth Straight Month” and Forbes’ “Case-Shiller shows U.S. Home Prices Hit Fresh Lows in February.”
On closer analysis, though, the market — and the divergence between the two reports — isn’t as confusing as it appears. The FHFA index catches far fewer distressed homes than Case-Shiller does. So FHFA reads that prices for “average” areas, without a lot of foreclosures, have come down 19% since the peak, while Case-Shiller, weighed down by foreclosures, shows that prices have come down 35%.
In other words, if you live in Dallas, which was never really reamed by a lot of foreclosures, the market isn’t that bad. (According to Case-Shiller, prices in Dallas are flat). If you live in a market where there have been a lot of foreclosures — let’s pick on Las Vegas — it’s terrible, with housing prices continuing to slide (down 8.5% year-over-year).
The poster child for “awful” in this month’s report is Atlanta, with prices down a dizzying 17.3% in February from the year before, according to Case-Shiller.
However, even regions weighed down by foreclosures eventually hit a floor, and that appears to be happening in Phoenix, which had seen a bubble of speculation collapse but has been in recovery for months now. In February, Phoenix prices were up 1.2% over the month before and up 3.3% year-over-year.
Miami, another spot where the vacation/second home market had taken a tumble, is up 0.6% over last month and up 0.8% over last year.
March sales of new single-family homes (think “homebuilder homes”) meanwhile, beat analyst expectations. I don’t love new home sales as a data point, because it’s such a small slice of the pie of the market, but it does say something about consumer confidence. New home sales in February were reported at an annual pace of 328,000, beating a Reuters consensus poll of 320,000.
That number is down 7.1% from the month before, but the new home sales numbers are often subject to later sizable revisions. The February number was just revised upward by 40,000, a 12% jump from what had been previously reported. I predict we’ll see a similar upward tug on the March number in just a few weeks.