Florida a key driver of regional home sale gains
In his January 31 speech in Miami, Atlanta Fed President Dennis Lockhart shared his thoughts on the economic outlook. While positive, he acknowledged some risk factors, or headwinds, that can act as a brake on growth.
"There are risk factors that I think bear careful watching.... The weakness of the U.S. housing sector—particularly house prices—could reemerge as a major drag on consumer spending over and above the direct effect of slow construction activity."
This risk bears watching in the Southeast. Some recent information appears to show that conditions may be slowly improving.
After falling sharply during the third quarter, existing home sales in the Southeast rebounded somewhat during the fourth quarter, up 13 percent from the prior quarter and similar to the national trend, according to data from the National Association of Realtors (see chart 1). The regional increase in sales was driven largely by Florida, where sales increased 20 percent in the fourth quarter compared with the prior quarter. Data from Florida Realtors indicate that condominium home sales in particular boosted existing home sales.
A look at annual existing home sales indicates that the Florida housing market outperformed others in the Southeast. In 2010, Florida and Mississippi were the only states to beat their 2009 sales levels, up 11 percent and 2 percent, respectively. Overall, existing home sales in the region grew 2 percent. Weakness was most pronounced in Georgia, where existing home sales declined 7 percent. Nationally, annual home sales declined 5 percent, while declines were a bit more pronounced in Alabama, Louisiana, and Tennessee (see chart 2).
Monthly home price measures from CoreLogic, which include distressed property sales, indicated that home prices in the Southeast continued to weaken on a year-over-year basis through the end of 2010 (see chart 3). Weakness was most pronounced in Alabama and Florida.
It appears that the Florida housing market hit bottom in terms of sales in 2008 and has improved since then, while home prices there have continued to weaken, perhaps even driving sales gains. Elsewhere in the region, the housing market continues to bounce along the bottom in terms of sales.
For more information about real estate and construction in the region, see the Data and Analysis page on the REIN section of the Atlanta Fed's website.
By Whitney Mancuso, a senior analyst in the Atlanta Fed's research department
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