Expert predicts housing rebound in summer

Responding to a Commerce Department report that new-home sales in most parts of the country slumped badly in January, local experts said metro Atlanta will also fare poorly when sales are tallied.

Steve Palm, president of SmartNumbers, a Marietta research firm, said resales in January were way off, so new-home sales will be, too.

The price spread between existing homes and new homes has reached $122,000, and “that’s the greatest it’s ever been,” Palm said. “I think we’re at a bottom now.”

He said a housing market turnaround should begin in June or July, led by existing homes because prices have plummeted. The new-home recovery will follow, he said.

In the metro area, new-home sales over 12 months were down 52 percent in December, the latest month with complete new-home data, according to SmartNumbers.

In December 2007, 3,048 homes sold in the 26-county area; last December that number slipped to 1,447, Palm said.

December sales were 283 units higher than in November, reflecting builder and developer eagerness to make year-end deals, he said.

Oversupply, escalating foreclosures and strict lending are all affecting home values, as are joblessness and weak consumer confidence.

Resale prices in Atlanta have returned to summer 2002 levels, the Standard & Poor’s Case-Shiller Index says. Over 12 months, prices in Atlanta have slipped 12.1 percent, Case-Shiller says.

According to Metrostudy, which also tracks new-home closings, sales in 22 metro counties fell 41 percent from the fourth quarter of 2007 to the fourth quarter of 2008.

Eugene James, Metrostudy’s Atlanta division director, said consumers are feeling insecure about their jobs and that’s hurting the market.

“Everyone is in a state of paranoia right now, too afraid to make any buying decisions,” James said.

He said prospective buyers have looked at homes but “the traffic just didn’t turn into writing contracts.”

The upside is inventory slipped 31 percent year to year even with meager sales because construction is almost nonexistent, James said. Smaller inventory is necessary for a correction.

The Commerce Department reported Thursday that sales fell 10.2 percent to a seasonally adjusted annual rate of 309,000, the worst showing on record going back to 1963.

It also was weaker than the pace of 330,000 that economists expected and shattered the previous all-time monthly low set in September 1981.

Only the Northeast saw sales rise in January from the previous month.