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03/25/2011

Southeast housing update: Polls show home sales soften in February, but outlook improving

The Federal Reserve of Atlanta's monthly poll of regional residential real estate brokers indicated that home sales growth softened in February, similar to the year-earlier level. Southeast home sales growth was slightly positive in February while the National Association Realtors (NAR) reported that, nationally, existing home sales declined slightly, down 2.8 percent from a year ago.

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In the Southeast, the positive trend in home sales continued to be driven largely by reports from Florida brokers while brokers elsewhere in the region indicated sales remained below the year-earlier level and were slightly weaker than in our January report.

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According to reports from Southeast home builders, new home sales growth was unchanged from January and remained below the year-earlier level. However, reports from Florida and Georgia builders indicated that sales growth weakened in February while elsewhere in the region sales were similar to year-earlier levels:

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Southeast builders reported that construction activity remained below the year-earlier level in February. Several brokers and builders from across the region complained that residential construction financing was unavailable. Some noted that much of the activity was limited to remodeling work for homeowners and banks who were rehabbing foreclosure properties. However, the southeastern outlook for construction activity growth over the next several months improved again in February, turning slightly positive.

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Reports from Southeast contacts indicated that home inventories eased in February on a year-over-year basis. CalculatedRisk also noted that existing home inventories edged down nationally in February based on NAR figures. Several brokers across the region noted that the number and speed of foreclosures coming to market had slowed. Contacts indicate that rental property is in greater demand as many who have been displaced by foreclosures look for housing. A Tennessee broker noted that transferees preferred renting to buying.

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Despite comparisons with sales last spring boosted by the federal housing stimulus, the outlook for sales growth over the next several months continued to improve, according to both builders and brokers. However, improvement among brokers was largely driven by Florida contacts while builders' improved expectations were more broadly based across the region.

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Note: February poll results are based on responses from 90 residential brokers and 47 homebuilders and were collected March 7–16, 2011.

The housing poll's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity, while negative values indicate decreased activity.

By Whitney Mancuso, a senior analyst in the Atlanta Fed's research department

March 25, 2011 in Housing | Permalink

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