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Can Real Estate Bounce Back This Spring?

After a tough winter, hope 'springs' anew for the housing market in Q2

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The housing market had a surprisingly difficult first quarter that caught everyone in the media flat-footed … but real estate insiders sure weren’t fooled.

housing-market-real-estateWhile bad weather in the northern states certainly was a factor behind several reports of declining sales or prices, it became the all-too-convenient industry excuse du jour for almost everything that went wrong.

And a lot went wrong in real estate. For instance…

  • The first quarter saw the NAHB/Wells Fargo Builder Confidence Index — a reliable measure of how the homebuilder industry feels about its immediate and future sales potential — suffer its worst monthly decline in history, as its monthly reading dropped from 56 to 46. Any reading below 50 is historically negative.
  • The very next day, the gloomy NAHB outlook was confirmed by a building starts report that declined a whopping 16% from the previous month.
  • Pending home sales (i.e. homes under contract that have yet to close) were up 0.1% from December to January, according to the National Association of Realtors (NAR). But this still was a huge 9% below the January 2013 report. It got worse yesterday, when the NAR reported that its pending home sale index reached its lowest level since October 2011.
  • Just this week, the Commerce Department reported that new home sales for February fell 3.3%, from January’s revised 455,000 to 440,000 — the worst action in five months.
  • In addition, the Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday declined 0.1% month-over-month for January. While it was 13.2% growth over January 2013, that still marked two consecutive months of slowed annual gains.

Meanwhile, Wells Fargo (WFC) and Bank of America (BAC), two of the largest lenders in the U.S., have recently laid off large numbers of their mortgage department staff.

In other words, this time, they aren’t waiting around for things to get worse.

Will Real Estate Spring Forward?

The feeling in the financial media — and one that is echoed as well by cheerleaders in the real estate industry, such as NAR — is that bad winter weather has merely caused a temporary glitch in the newest real estate bull market. When spring arrives, they fully expect the housing market to explode again.

But will it?

Article printed from InvestorPlace Media,

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