US Real Estate Prices plunged but confidence report shows signs that relief may be in sight
The U.S. real estate market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down prices. The single-family home prices according to the Standard & Poor’s/Case-Shiller Home Price Indices released on Tuesday showed prices in the first quarter of 2009 dropped at a record annual pace of 19.1 percent.
Is the US Real Estate market about to rebound?
A better-than-expected consumer confidence number sent the stock market higher on Wednesday. This may just be the sign that for many potential home buyers that have been staying on the sidelines and waiting for prices to hit bottom and for the economy to stabilize.
The Standard & Poor’s/Case-Shiller Home Price Indices is a lagging indicator especially since the report was based on March numbers. The index did show a constant leveling off of home price declines. The U.S. consumer confidence soared in May to its highest level in eight months could indicate that Home Price Index reports to be released in the up coming months could also reflect the same soaring consumer confidence.
Although the confidence report only showed 2.3 percent intend to buy homes over the next six months, the first sign of a confidence turn around is likely to be followed but a slow upward trend for bigger tickets items such as homes. Many consumers will find the current low interest rates and affordable US real estate prices hard to resist once a sense of confidence has returned to the US market.