Analysts are hailing the beginnings of a recovery in the nation’s housing market. But to beleaguered homeowners, it will not feel like much of one for many months to come.
The number of existing homes sold rose 2.3 percent in July from the previous month, according to figures released Wednesday. Volume was up more than 10 percent from a year ago.
For several months, economic data and accounts from real estate agents across the country have calmed fears that the overall market could take another big step down, giving prospective home buyers some assurance that prices were stabilizing.
Yet the nascent recovery is still a convalescent one, with the pace of activity uneven and far below the levels reached before the bubble burst. Home prices remain under pressure in many markets.
In fact, Wednesday’s report from the National Association of Realtors showed that average sales prices actually dipped slightly from June to July. This seeming contradiction — increasing demand but anemic growth in home values — could represent a new normal in the housing market, experts said.
Real estate agents across the country cited the weak job market, stagnant wages and tight lending standards as continuing restraints on prices, despite pent-up demand and mortgage rates near record lows.
Even relatively optimistic observers like Michelle Meyer, an economist with Bank of America Merrill Lynch, foresaw only gradual improvements in home values. She expected home prices to rise 2 percent annually in 2012 and 2013, with momentum gradually increasing later in the decade. At that rate, the average home price would regain its 2006 peak in 2022.
“Inventory is lower and construction is incredibly depressed,” she said. “But it’s bumpy. We could see prices weaken slightly in the fourth quarter of 2012 and the first quarter of 2013.”
Joe Abbruzzese, a retired farmer from upstate New York, was in southwest Florida this week bargain hunting for a second home. “I wanted to get down here before the snowbirds arrive,” he said. He was looking at five or six properties in the low- to mid-$100,000s before he left New York, but by the time he arrived in Florida only one was left.
Mr. Abbruzzese said that while prices had increased in recent months, he was betting that they would rise still more after the presidential election restored some certainty to the country’s political course. “I think people are really scared right now; they’re not spending the money,” he said.
While new buyers might take comfort in the fact that deep declines in home values seem to have passed, more than 11 million current homeowners owe more on their mortgages than their homes are worth. In July, home sales were running at an annual pace of 4.47 million, an improvement over a year ago, but well below the high of 7.25 million reached in September 2005.
New-home sales also were picking up, lifting share prices for many home builders. On Wednesday, Toll Brothers reported a sharp rebound in profits, lifting its stock 3.8 percent.
A number of factors have helped nudge prices higher, including shrinking inventory — particularly on the more affordable end of the market. There is about a six-month supply of homes, according to the Realtors’ group, down from more than nine months last summer.
In California, the supply of houses has become so slim that agents protested a bulk sale of 500 foreclosed houses by Fannie Mae, the mortgage giant, saying there was no need to sell the homes at a discount to investors when there were retail buyers willing to buy them. (Most of the properties would not have been sold individually because they were occupied by renters.)
Concerns that a flood of distressed properties will soon hit the market were also receding.
Banks have been taking more aggressive measures to avert foreclosures, which have been declining for almost two years, according to RealtyTrac. Short sales, the practice of allowing homeowners to sell their property for less than they owe before the home reaches the auction block, are on the rise. Some banks have recently introduced “deed for lease” initiatives to convert delinquent owners into renters instead of evicting them.