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Charlotte-area home prices showed a slight monthly gain in March, the first monthly uptick since June and another signal the region's housing market may be hitting bottom.
Of late, the area's deep housing decline has shown signs of slowing.
Sales remain significantly depressed, but the decline in first-quarter sales was about the same as in the fourth quarter of 2008. April closings were off a lot less than the previous six months – one of several “less bad” economic indicators seen lately.
The little price hike in March is surprising because it marks an actual improvement. The Charlotte region's 0.3 percent gain also was the best monthly performance among the 20 urban markets nationwide measured by the S&P/Case-Shiller Home Price Index.
The good news, while welcome, brought strong cautions against reading too much into one month's results. The area's housing market and overall economy remain troubled. Pay cuts and layoffs, which have affected banks, schools and local government, are far from over.
The market also still faces a glut of homes for sale, and are many advertising reduced prices. The meager home-price gain in March was likely driven, at least in part, by an artificial lull in foreclosure activity.
“I'm not even sure I'd start washing the glasses yet, let alone breaking out the Champagne,” said David Blitzer, chairman of S&P's index committee.
Blitzer's outlook on the housing market nationwide was glum, based on the index's quarterly reading that covers the 20 major markets and many more. For the first three months, it showed a 19.1 percent decline compared with a year ago, the sharpest drop in its 21-year history.
The closely-watched monthly report on the 20 markets, including Charlotte, struck a slightly more optimistic note. Overall, the group remains down sharply from a year ago, but March was the second consecutive month since October 2007 in which it did not have a record decline year-to-year.
For Charlotte, the index showed a 9.3 percent decline in March compared with March 2008. That marked a full year of declining prices when compared with a year earlier.
Comparisons with a year earlier are important because considering similar periods reduces the impact of seasonal effects, such as the typical rebound of home sales during the spring.
Still, month-to-month changes can signal a trend.
The Charlotte market started a string of monthly declines in July 2008 and peaked at a loss of 2.6 percent in December's index. March's gain, compared with February, was the first since last June.
“One month doesn't make a trend,” said Adam York, an economist with Wells Fargo's Wachovia economics group in Charlotte. “I wouldn't say this is likely to start a string of positive increases. Charlotte still has some major economic headwinds to face.”
The index is especially meaningful because it tracks repeat sales of existing houses. That's a more precise measure of home values than the sales prices reported monthly by the Charlotte Regional Realtor Association and other services. Those average and median prices are skewed by what's selling, in which neighborhoods, in a given month.
That said, the Case-Shiller results follow 5 percent monthly price gains in March and April for transactions through the association's Carolina Multiple Listing Services.
“Prices … seem to be holding their own a little,” said Holly MacFalls with Best Choice Realtors in Davidson. But, she added, “it depends on the area of town you're in.”
Both the MLS and index prices likely benefited from a sharp decline in foreclosure activity from November through February. The pause was driven by foreclosure moratoriums by mortgage lenders and servicers and a new N.C. law that temporarily delayed proceedings.
Foreclosed properties typically sell at significantly depressed prices. Foreclosure activity has rebounded, with Mecklenburg filings soaring in March and April. The filings mark the start of foreclosures, which are likely to rise again as the backlog works through the system.
“This is going to be a long process,” Blitzer said, speaking of the nation's moribund housing market. “We've got to work through all those cheap deals before prices start going up.”
Charlotte Realtor Donna Anderson, president of the local industry group, welcomed the index results and said activity has been improving.
“We're optimistic, but we still have to be very cautious with our pricing,” she said. “Don't try to make a killing. Price it competitively.”
