Latest Figures Suggest U.S. Housing Recovery Is Still On Track

Home prices in the U.S. dipped a bit in November, but not enough to derail the recovery that's been taking place in the housing sector. The Case-Shiller home price index showed prices up in a year-over-year comparison. Audie Cornish talks with Yuki Noguchi.

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MELISSA BLOCK, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

AUDIE CORNISH, HOST:

And I'm Audie Cornish.

Home prices were either up or down, depending on how you read the latest Case-Shiller survey, which was released this morning. Prices were down a bit in November from the previous month, but up sharply compared to the previous year. Taken together, most analysts say the housing recovery is still on track. And joining us now to discuss the housing market is NPR's Yuki Noguchi. Hi there, Yuki.

YUKI NOGUCHI, BYLINE: Hello.

CORNISH: So help me understand what the heck is going on here? What's going on with home prices compared to recent years?

Well, you know, the survey you mentioned, the Case-Shiller index, looks at the 10 and 20 largest metro areas. And the last time average prices were this high was 2010, but of course prices fell from that point. So the last time prices were at this level and climbing was in the fall of 2003, so a decade ago. But they're still off about a third from their peak in 2006.

But the 2006 prices, of course, that would be what the market produced just as the real estate bubble was about to come to an end, right?

NOGUCHI: Right. So it's safe to assume that those prices were inflated.

CORNISH: All right. Well, back to 2012 then. In half of the cities surveyed, prices fell from October to November. How do you explain that?

NOGUCHI: Well, the report says that's less about a downward trend and more about the fact that housing just tends to be weaker in the winter. It's not a hot time to buy or sell a house. And if you adjust for that seasonality, the only market that fell was New York City. And New York City was, in fact, the only market where prices fell year over year. Prices in Phoenix, meanwhile, jumped 23 percent in the last year.

CORNISH: At the same time, in the last week we've seen data about existing and new home sales and also pending home sales. And none of them were as robust as expected, as people said they would be. I mean, why are most analysts saying that housing is really strong?

NOGUCHI: Right. It seems sort of counterintuitive. The issue is that in a lot of markets, like all across California, Washington, D.C., and a number of other markets, there's actually very little inventory. Inventory is below normal levels, especially at the low end of the market. I was looking at a chart yesterday from the online realty firm Redfin. And if you'll look at the houses listed below $200,000, there are far fewer listings this year than last year. So although interest rates are incredibly low, although the job market is improving, although people are gaining confidence and buying again, there's just not a lot to buy.

CORNISH: So does that mean that there's a corresponding boom in construction?

NOGUCHI: Well, in some areas, there is a lot boom for - and there is a lot of demand for new housing. And new home starts, you're seeing rebounding. But it's not an all-out boom. Home builders that I've talked to recently still have a lot of concerns. Some say banks are still reluctant to sign off on construction loans necessary to build. And some say that their suppliers have gone out of business in recent years and, with less supply, prices for equipment and materials are up. This is an industry, you have to remember, that was really, really badly burned. A lot of people have left the business. A lot of people have left the business. And a lot of businesses have failed. It's going to take a very long time to reverse all that.

CORNISH: So I got to ask, since we have a little time left, when all the dust settles, does this mean fewer people will also be able to qualify to buy homes?

NOGUCHI: Yeah, fewer buyers will be able to qualify for loans than several years ago and that's probably a good thing. Clearly, we went through a period where there was too many mortgages granted to too many people. And a lot of those people are now in foreclosure. We also have a new set of rules from the Consumer Financial Protection Bureau that were announced recently that are designed to make sure that lenders don't get into that position again with borrowers.

CORNISH: Yuki, thanks so much.

NOGUCHI: Thank you.

CORNISH: That's NPR's Yuki Noguchi.

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