There are more signs that the real estate market is stabilizing from the FHFA monthly house price index (HPI), which is
calculated based on home sales price information from conforming Fannie Mae and Freddie Mac mortgages. As Brian Wesbury et al. point out today
, the HPI increased by 2.9% in March compared to a year earlier, which was the largest annual increase since November 2006, and the second straight month showing an annual increase following 54 consecutive monthly decreases in year-over-year prices (see top chart above). The February-March monthly increase in the HPI of 1.9% was the largest monthly gain in the FHFA series going back to 1991.
The bottom chart above displays the HAI back to 2000, and shows that the market reached a cyclical price bottom about a year ago, home prices may have found a support level over the last year, and we're now in a new period where we can expect small, but positive and consistent increases in home prices going forward.
"In short, the housing bubble has burst and prices have finally returned
to sensible levels. The repricing of the U.S. housing stock has allowed
the market to clear; we've seen the worst, and now things are beginning
to improve on the margin. The evidence is becoming very strong that at the very least we have seen a bottom in the residential housing market."
Amen. And it's likely we're now moving past the bottom, which could very likely be established as March 2011.