FBR analyst Lauren Burk says the housing market is much worse yesterday’s horrible OFHEO report suggests. The report showed home price dropped 1.7% q/q and 3.1% y/y, an acceleration from the previous quarter and the worst drop in 17 years. But the real picture may actually be worse. FBR:
We still feel that OFHEO home price data is not picking up the full extent of the declines and expect further material deterioration in upcoming quarters…There is simply too much supply on the market, with new homes showing a record 11 months of supply and existing homes showing almost 10 months as of March…
Both the OFHEO and S&P/Case-Shiller home price indexes have been showing declines since January 2007. The Case-Shiller, which will release March numbers on May 27, hit record lows in February in both the 10-city and 20-city composites. Of the 20 cities covered, only Charlotte NC showed any year-over-year increases in February, and we do not expect next week’s numbers to show any improvement. There is simply too much supply on the market, with new homes showing a record 11 months of supply and existing homes showing almost 10 months as of March.
Details of OFHEO:
Especially hard hit was the Central Valley of California, including Merced, Modesto, Stockton, and Sacramento – where home prices have dropped 20% or more in the last year…
The index showed declines in 128 of the 292 ranked MSA’s, with Florida and California being particularly hard hit…
OFHEO does not break out individual states in the monthly data, only U.S. and census divisions. Every division showed a year-over-year decline except the West South Central, which is made up of the states of Arkansas, Louisiana, Texas, and Oklahoma. The U.S. as a whole saw quarterly declines of 0.4% and a yearly decrease of 3.4%.
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