\nResidential property sales have creeped up slightly according to the latest figures but prices are continuing to fall and analysts are expecting further declines through 2011 and into 2012.\n<\/p>\n
\nPending home sales rose 4.3% in August compared with July, according to the latest figures from the National Association of Realtors. The index, which is based on contracts signed, was 82.3 for the month, up from a downwardly revised 78.9 for July, yet 20.1% lower than a reading of 103 a year earlier.\n<\/p>\n
\nBut NAR chief economist Lawrence Yun said historic low lending rates appear to be bringing buyers back to the market and an increase in mortgage rates could have a catastrophic effect.\n<\/p>\n
\n\u2018Recent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices, are raising concerns about future inflation and future mortgage interest rates. Higher inflation would mean higher mortgage interest rates,\u2019 he explained.\n<\/p>\n
\nHis warning comes as the latest Altos Research 10-city composite index shows that prices fell in September by 1.5% to an average median price of $465,968. It means that in the last 14 months, prices have only increased month on month once in May when they edged up 0.2%.\n<\/p>\n
\nFurther price falls are expected, according to Altos. \u2018As the market continues to correct, continued price decreases can be expected, likely until the early part of 2011, when the boost of the Spring market is felt,\u2019 it said in its report.\n<\/p>\n
\nWhile analysts at Morgan Stanley said they expect property prices to continue to slide, reaching new depths in 2012, as real estate sales have yet to bottom and appear to be lower than two years ago.\n<\/p>\n
\nAnalysts said owner occupied housing hasn\u2019t improved despite some private sector job gains, increased household formations, and historically low mortgage rates. As lending standards tighten, mortgage originations backed by the Federal Housing Administration are also slowing and further hindering homeownership, according to Morgan Stanley.\n<\/p>\n
\n\u2018There is a very good chance that both total home sales in 2010, as well as the average of home sales in 2009 and 2010, will be lower than in 2008,\u2019 the analysts said in the investment giant\u2019s recent Housing Market Insights report.\n<\/p>\n
\nMorgan Stanley expects 2011 home prices to fall 5% to 10% from this year with four years of flat prices after that, although \u2018the risk of slight additional downside in prices, and extension of the trough to 2012, has increased,\u2019 the report also says.\n<\/p>\n
\nThe analysts said continued government support of lending by Freddie Mac, Fannie Mae, and the FHA remains critical, but if no federal policy changes are enacted, the affects \u2018could range from marginally to significantly negative\u2019.\n<\/p>\n
\nReducing the current shadow inventory of 8 million homes, which are valued at an aggregate $1.68 trillion, is of utmost priority, it also says.<\/p>\n","protected":false},"excerpt":{"rendered":"
\nResidential property sales have creeped up slightly according to the latest figures but prices are continuing to fall and analysts are expecting<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[],"persona":[],"class_list":["post-2921","post","type-post","status-publish","format-standard"],"acf":[],"yoast_head":"\n