News bulletin: The Case-Shiller housing index for May will be released Tuesday, and the news will be bad.
Sure, prices may tick up a little bit. But U.S. house prices have been mired in a Depression-like malaise for years now, with prices down more than 50 per cent in some markets.
When the best thing you can say is that the market may be nearing its bottom (as has been said several times since the housing market dragged the U.S. economy into recession in 2008), you know you have problems.
Still, investors have been cheered by any sort of data showing house prices may be firming. The index - which tracks sales in several markets to try and get realistic view of the American market - rose for the first time in two years on a month-over-month basis in April and sparked a burst of optimism.
The 10-city index gained 0.8 per cent month-over-month, while the 20-city index gained 0.7 per cent.
But the rest of the data were a reminder of how bad the market remains. With record low interest rates making mortgages as affordable as at any time in history, the 10-city index was down 3.1 per cent from the previous April. The 20-city index was down 4 per cent - analysts expect another decline of about 4 per cent year-over-year when the May data are released Tuesday.
As everyone looks over the resale housing data, new housing sales will provide another glimpse into the market. Sales came in at 330,000 last month, a jump of 8.2 per cent month-over-month, but analysts don't expect sales to keep climbing.
Instead, they expect activity to level off at around 330,000 new monthly sales. They expect U.S. builders to sell up to 5.5 million new houses for the year.
While it may be good news for builders to see an up-tick, that leaves those trying to sell their houses with that much more competition. That's just one more reason the housing news will remain bleak, for at least the rest of the year.
Far more ominous for house prices, however, is the number of foreclosures still working their way through the system and putting downward pressure on resale prices.
RealtyTrac estimates 4 million homeowners will lose their houses to foreclosure this year. Another 5 million are considered delinquent, meaning they could slip into foreclosure if they don't find a way to catch up on their payments. The long-term average is 600,000 per month.
So whatever the Case-Shiller index tells us Tuesday, one thing is clear - hitting the bottom would feel pretty good right about now.