Freddie Mac: Sales bottomed in Q1

Freddie Mac analysts think home sales bottomed in the first three months of 2009 at an annual rate of 4.46 million per year, and will post steady gains each quarter to reach a pace of 5.85 million sales per year by the fourth quarter of 2010.

Sales of both new and existing detached single-family homes are expected to bottom this year at 4.72 million -- down 37 percent from the 7.46 million transactions closed in 2005 -- before rebounding to 5.5 million next year, Freddie Mac said in its July 2009 Economic and Housing Market Outlook.

Through May 2009, Florida has posted nine consecutive months of growth in sales, and California has posted 14 months of growth in a row, the report noted.

"Many of these sales, of course, are distressed sales, consisting of short sales and sales of foreclosed properties," the report said. "Nevertheless, that indicates that there are ready buyers at current prices, and these distressed sales do clear out the stock of for-sale homes."

The consistency of the improvement suggests these markets may have bottomed, the report said. Although home prices tend to lag, there are also signs of "the seeds of turnaround" in prices, Freddie Mac said. Although national home prices are expected to continue falling for the remainder of this year and next, the pace of declines is projected to be much more gradual next year.

The Standard & Poor's Case-Shiller Home Price Index, for example, showed prices falling at an annual rate of 26.6 percent during the first three months of the year. The report projects that the index will show the annual rate of decline slowing to 10 percent during the third quarter of this year, and shrinking each quarter of 2010 from a high of 5 percent to 1 percent.

Freddie Mac analysts see unemployment peaking in the final three months of this year at 9.9 percent, but persisting at an average of 9.7 percent throughout 2010. The "dismal jobs outlook" may delay economic recovery but is unlikely to derail it, Freddie Mac analysts said. ...CONTINUED

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