Home repossessions spiked higher in the US last month, threatening a new leg down for house prices as bank-owned properties flood the market.
Banks, which had held off on foreclosures at the start of the year because of several state-negotiated moratoria, sent out repossession notices to more than 340,000 homes in March, up 47 per cent on the same month a year ago. Foreclosures "came back with a vengeance" last month and are likely to keep rising, said Rick Sharga, senior vice-president at RealtyTrac, the property listing website that did the survey.
Economists were cheered, however, by a countervailing trend: the shrinking number of homes being built. Housing starts were down 11 per cent in March, a bigger than expected drop. Starts have plunged from a peak annual rate of 2.27 million in January 2006 to just 510,000.
Dennis Lockhart, a member of the Federal Reserve's interest rate setting committee, said yesterday that house prices were a concern, but he was "cautiously optimistic" for a recovery in the second half. The latest unemployment data yesterday showed an unexpected drop in claims last week.Reuse content