By Ian Swanson - 03/30/10 11:40 PM EDT
Tuesday brought mixed news at best on the housing front
The Case-Shiller Home Price Index reported that home prices in January rose for the eighth straight month. That’s the good news.
A separate index kept by Federal Housing Finance Agency shows prices dropping, and a huge glut of homes on the market suggests there’s pressure on prices to drop.
The high unemployment rate doesn’t help, either.
IHS Global Insight predicted Tuesday that home prices will fall 5 percent for the year.
In a research note, the group said the single-family glut of homes that are vacant or for rent suggests prices will fall, not rise.
There’s talk in Washington of again extending a tax credit for homebuyers that Congress already has approved twice.
After the first credit expired at the end of last November, there was a rush to take advantage of it. That sparked Congress to approve a new credit more generous than the first.
This second credit appears to be having less of an impact on sales.
Patrick Newport, an economist with IHS, said the initial tax credit likely moves sales up to 2009 from 2010, and exhausted the ability of many homebuyers to buy.
“Demand has dropped significantly since the first homebuyer tax credit expired, and the second credit, up to now, is having minimal effects, the housing glut is still near record highs and foreclosures — which hit an all-time high at the end of 2009, according to the Mortgage Bankers Association — are likely to go even higher,” the IHS note reads.
Despite the Case-Shiller report, IHS said it believes “prices have further to fall — about another 5 percent.”