Signs continue to point to slow housing recovery

The residential real estate market continues to give off mixed signals — indications of continued, yet gradual, improvement that is well shy of full recovery.

Among the current signs:

•Standard & Poor's Case-Shiller Indexes, which measure home prices nationally, showed year-over-year declines in February. Nine cities, including New York and Chicago, reached post-housing-bubble lows. Prices stand now where they were in late 2002-early 2003.

•Single-family home prices in the city of Philadelphia declined 4.6 percent in the first quarter from fourth-quarter 2011 levels, according to Kevin Gillen, a vice president at Econsult Corp. That brings the city's cumulative price decline since the bubble burst locally in third quarter 2007 to 21.3 percent. To compare, prices in Phoenix are 54.2 percent lower than their peak.

•First-quarter sales of previously owned homes in the eight-county Philadelphia region were 9.6 percent higher than levels of the first three months of 2011, according to Prudential Fox & Roach's HomExpert Market Report. Prices fell 2.6 percent over the year in the region, and were flat from the fourth quarter. City median prices, including condos, were down 6.4 percent quarter to quarter.

•March new-home sales nationally declined 7.1 percent from February but were 7.5 percent above year-ago levels, the Census Bureau reported. The median price was $234,500, up 6.3 percent from March 2011. The numbers were based on a small sample, however.

The apparently contradictory data may be confusing, but Moody's Analytics chief economist Mark Zandi summed up the situation this way: "The housing crash is largely over, but we are a year away from a sustained housing recovery."

Case-Shiller's calculations do not include Philadelphia, but for the rest of the country, "broadly speaking, home prices continued to decline in the early months of the year," said David Blitzer, chairman of S&P's indexes committee.

Nine cities covered by Case-Shiller saw prices drop in February from January. The monthly drops for both its composite indexes, 10 cities and 20 cities, was 0.8 percent. Atlanta's year-over-year loss of 17.3 percent was the worst of all the cities included.

"The Case-Shiller home-price indices collapsed between mid-2006 and mid-2009," said economist Patrick Newport at IHS Global Insight. "Since then, they have moved up during the selling season and down during the off-season, but generally have been slowly inching down."

The differences in Gillen's price calculations for Philadelphia and those of the HomExpert report are based on what is and isn't included in each: Gillen's covers single-family sales, minus distressed housing, as reflected in data obtained from the Philadelphia Recorder of Deeds. HomExpert covers sales of properties, including condos, listed on the Trend Multiple Listing Service, and includes sales of distressed housing that are listed with agents, though most such transactions don't appear to be handled through Realtors.

If he had included sales of distressed housing in his index, Gillen said, the quarterly price drop would increase to 9 percent. "These institutional transactions are going for very low prices," less than $10,000 in many cases, he said.

Although 4.6 percent by his index, or 6.4 percent by HomExpert, are large declines, "it is in line with the quarterly declines that occurred before the home-buyer tax credit tapped the brakes" in 2009 and 2010, Gillen said.

Contributing to the monthly decline in new-home sales was the upward revision of February's numbers by more than 40,000. Numbers for January and December also were revised upward.

"Sales are improving at a snail's pace from near-record lows," Newport said. "Inventory continues to shrink — good news since builders will have to replenish stocks by ramping up on starts once demand picks up."

Inventory is at 5.3 months; a four- to five-month supply is considered ideal.

"Housing has two key problems," Zandi said, "too many vacant homes and too many loans in the foreclosure pipeline."

"The excess vacant space will be largely absorbed by this time next year," he said, "and the foreclosure pipeline will be significantly smaller by mid-2013."

Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com or@alheavens at Twitter.