With 2014 closed, a look back reveals we have a lot to celebrate. The past year proved to be promising for the Atlanta real estate industry and the overall economy showing consistent traction toward recovery. Since the beginning of 2014, the inventory crunch has eased, home prices have elevated, home sales increased, foreclosure levels continued to decline and rates remained historically low.
Despite an overall successful 2014, Atlanta’s real estate industry experienced a standard winter decline in the housing market with the Cal-Culator, Atlanta’s residential real estate index, dipping 0.1 to a 6.2.
Among the factors that contributed to the slight decline in the monthly index include a decline in pending home sales, decelerating home prices and a decline in developers’ sentiment.
The latest S&P/Case-Shiller Home Price Indices reflected that though 2014 has been an overall good year for home prices compared to 2013, the last few months have demonstrated decelerating price growth. The National Index reported a month-over-month decrease in home prices for the first time since November 2013.
While the 20-City Composite, where Atlanta is featured, posted a 0.1 percent decline, Atlanta reported a deeper decrease of 0.3 percent in month-over month numbers. However, Atlanta posted a 4.5 percent increase in 1-year change, one of the highest growths in the Southeast.
Recent home sales reports indicate improvement in the industry compared to 2013, however the reports also indicate more recent decline. Pending home sales, a forward-looking indicator based on contract signings, declined in October, according to the latest report by the National Association of Realtors. While pending home sales decreased 1.1 percent month-to-month, pending home sales rose 2.2 percent compared to October 2013. The NAR reported that tight credit and a lack of wage growth are contributing to the decline.
“Demand is holding steady but would be more robust if it weren't for lagging wage growth and tight credit conditions that continue to hamper those individuals looking for relief from rising rents," said Lawrence Yun, NAR chief economist.
The National Association of Home Builders’ Multifamily Production Index released its third quarter numbers in November. The index reached 54 – four points below the previous quarter’s reading. However, despite the four-point drop, the score reveals that more builders and developers reported an improvement in the housing industry over those who reported worsening of the industry.
Though the Atlanta residential real estate index experienced a slight decline in December, we have plenty of reasons to celebrate a successful 2014 and anticipate a promising year ahead. Stay tuned – the first Cal-Culator of 2015 will be released January 13.