Americans rebounded from a weak holiday season and stepped up spending on retail goods in January. The latest government report on retail sales pointed to a slowly improving economy. Retail sales rose at a seasonally adjusted 0.WASHINGTON – Thought the housing crisis was over? Not quite.
Despite four years of falling prices and recent signs that they were finally bottoming out, homes are expected to lose still more value in many metro areas over the next year.
Parts of the country already pummeled by the housing crisis, including Las Vegas, Phoenix and Miami, will be hit hardest. But even some places that have rebounded or held up relatively well – including New York, Los Angeles and Washington, D.C. – will suffer, too.
That’s the conclusion of economists who have been reducing their estimates for home prices as the outlook for the economic recovery has darkened. The number of homes for sale or headed for foreclosure is so high that they think prices will be even lower by next July.
Because housing is such an important engine of the economy, lower prices could dim the recovery. When home values fall and people have less equity, they tend to cut back on spending. And as prices decline, potential homebuyers stay on the sidelines, slowing sales even more.
Earlier this year, analysts said they thought home prices had finally reached their low point and were ready to start rising slowly in most areas of the country. Now, they think the actual bottom could be nearly a year away.
The average home price in the Standard & Poor’s Case-Shiller index of 20 big U.S. cities is forecast to drop nearly 2 percent this year from a year earlier, according to the average estimate of more than 100 economists polled this month by MacroMarkets LLC.
That’s more pessimistic than in May, when the consensus was for prices to be nearly flat. Other, more bearish analysts think prices will sink 10 percent or more.
Sales of new homes jumped last month, but it still was the second-weakest month in the 47 years records have been kept, the Commerce Department said Monday. Sales for April and March were also revised downward.
Michael Gao, 31, a software engineer in Mountain View, Calif., is watching home listings but thinks renting is the wiser option for now. He fears the economy will worsen and the home market will suffer.
“It’s really not looking good,” Gao said. “If the housing market will dip, then why would you buy now?”
