The “shadow inventory” of U.S. homes likely to come up for sale soon declined in early 2011 and a measure of house prices unexpectedly rose in April, providing rare cause for optimism in the battered housing market. Wednesday’s data seemed to be in line with broad expectations that the housing slump could play itself out this year before a gradual recovery gets underway in 2012. In a positive sign for the market, the Federal Housing Finance Agency said its home price index rose 0.8 percent in April, the first monthly gain since May 2010. “The strong gain in April was unexpected and presents some of the first positive news on home prices in almost a year,” said Michael Gapen, an economist for Barclays Capital. He said improvements in the economy should boost demand for homes, alleviating some of the pressure on prices from unsold homes. The shadow inventory data showed modest improvement, with the number of homes likely to hit the market dropping to 1.7 million, equivalent to 5 months’ supply. That was down from 1.9 million in the same period last year, according to CoreLogic, which cited fewer new delinquencies and a high level of distressed sales. [Read this article]
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