Home, Home I'm Deranged, Part 29

The bottom in the housing market has been called for later this year by Zillow.  Don't believe it for a second.

Online real estate marketplace Zillow said home values rose 0.5 percent in March from February, the largest monthly increase since May 2006 when the housing recession began.

Zillow’s report describing the first quarter follows two other reports about the housing market released on Tuesday.

The Standard & Poor’s/Case-Shiller home-price index showed average home prices tumbled to their lowest level in nearly a decade, after prices dropped in February from January in 16 of the 20 cities it tracks.

A separate report from the Commerce Department indicated new home sales fell last month by the most in more than a year to a seasonally adjusted annual rate of 328,000 units.  That followed a 7.3 percent increase in February.

“I think the variety of data points of housing market we’re getting this week all point to a slowly healing housing market,” Stan Humphries, Zillow’s chief economist, said. “We think of it as a bottoming process, as opposed to the bottom being a discrete point in time.”

Humphries said the “bottoming process is well under way and is made up of new home sales that have reached bottom and are starting to rebound a bit.”

The Zillow Home Value Forecast shows that national home values will fall 0.4 percent over the next 12 months, suggesting that U.S. home values could reach bottom in late 2012.

Bullshit.

What nobody is factoring in (because it's an election year) is, as I've been saying for three years plus now, that the logjam of foreclosures still has to break before the housing market can hit bottom.  Foreclosure numbers are the only things that matter right now.  And those foreclosures are back on the rise.

Rising foreclosures are weighing on the U.S. housing market, reducing prices and keeping new-home sales weak.

Foreclosed homes are usually sold at steep discounts, thereby lowering average prices. And by expanding the supply of low-priced previously occupied homes, foreclosures tend to limit demand for new homes.

Some economists expect foreclosures to keep prices under pressure this year, even though they think sales of previously occupied homes will rise.

Banks are stepping up foreclosures in about half the states. The increase comes after state officials settled a dispute in February with five of the biggest mortgage lenders over foreclosure abuses.

"Foreclosures, excess supply and weak demand will drive home prices ... down at least another 5 percent," said Patrick Newport, an economist at IHS Global Insight.

Five percent?  More like 10% or 15%.  We still have a long way to go on housing prices, folks.  We'll see prices fall more sharply as those foreclosures stalled from last year's Foreclosuregate mess start to be processed en masse and they're free and clear to do so now that the settlement is done.  Expect the banks to rapidly pick up the pace of foreclosures this summer and fall.  Housing prices?  Look out below!