The Federal Housing Finance Agency (FHFA) released its monthly
report today on U.S. home prices in May, based on its House Price Index
(HPI) for houses financed or guaranteed by Fannie Mae or Freddie Mac. According
to the FHFA, home prices increased in May by 0.8% from April to an index level
of 188.06, which was the highest level for home prices since August 2010 (see
top chart above). The April-May increase in the HPI was the fourth
back-to-back monthly price increase starting in February, and was the largest
four-month increase in home prices (3.47%) since the fall of 2005.
Over the last year, home prices have increased by 3.7% since May 2011, and
that annual gain was the largest yearly increase in home prices since
September 2006, almost six years ago (see bottom chart). It was also the first time of four consecutive annual increases since the summer of 2007.
In related housing news today, leading real-estate information provider
Zillow reported that its Home Value Index increased in the second quarter by
0.2% from last year, marking the first annual gain in its measure of home
prices since 2007. Zilllow's chief economist Stan Humphries declared that
the increase in home prices for the first time in almost five years means that
the U.S. real estate market has finally reached a bottom and has now entered a
new period of gradually increasing home values.
Bottom Line: The evidence continues to mount that we've
passed the bottom of the U.S. housing market, as we continue to see sales gains
for both new and existing homes, and gradual but ongoing increases in home
prices according to various sources like the FHFA, Zillow, CoreLogic
and the National
Association of Realtors (median existing-home price in June was the highest
since 2008). Moreover, home
builder confidence reached a five-year high this month, and the S&P
Homebuilders Index has gained 20% over the last year (compared to an
overall flat stock market), which provides additional evidence of a real estate
recovery. With record-low mortgage rates and pending
sales at the highest level in two years, we can look for more improvements
in the real estate market going forward through the rest of the year.
Just in time for the coming recession.
ReplyDeleteWe had price and volume jumps during this (seasonal strength) period of the year in 2010 and 2011, and then they resumed the down trend.
ReplyDeleteIf we had not had a large jump this year, considering all time record low mortgage rates and by a substantial amount, it would truly have been shocking.
The critical period is the next 2-3 months - will the price increases hold up, not only due to the many economic headwinds but also due to seasonal issues? I think not. Time will tell.
Dataquick weekly sales & prices, 2008 to date
A feeble recovery, but a recovery nonetheless---Japan-style.
ReplyDeleteGreen Shoots?
ReplyDeletehttp://www.zerohedge.com/news/no-housing-recovery-these-three-charts
Bottom Line: The evidence continues to mount that we've passed the bottom of the U.S. housing market, as we continue to see sales gains for both new and existing homes, and gradual but ongoing increases in home prices according to various sources like the FHFA, Zillow, CoreLogic and the National Association of Realtors (median existing-home price in June was the highest since 2008). Moreover, home builder confidence reached a five-year high this month, and the S&P Homebuilders Index has gained 20% over the last year (compared to an overall flat stock market), which provides additional evidence of a real estate recovery. With record-low mortgage rates and pending sales at the highest level in two years, we can look for more improvements in the real estate market going forward through the rest of the year.
ReplyDeleteSo you have been telling us for more than a year. But I don't see much evidence of the employment and income growth that is necessary to establish a solid foundation for the housing market. And I would have thought that the large restatement by the NAR would have taught you a lesson or two.
The mortgage applications index does not support a real bottom having been made
ReplyDeleteWhile we seem to have hit the bottom on house prices, there is very little employment and no income growth to sustain overall growth in the economy.
ReplyDeleteSales of New U.S. Homes Unexpectedly Fall From Two-Year High
ReplyDeletehttp://www.bloomberg.com/news/2012-07-25/sales-of-new-u-s-homes-unexpectedly-fall-from-two-year-high.html
(fow what its worth): From CNBC: Home Sales Disappoint Twice
ReplyDeleteSigned contracts to buy new homes fell 8.4 percent from the previous month, according to the U.S. Commerce Department, although they are still up 15 percent from a year ago.
Sales levels are now at their lowest since January.
This is the second miss for housing in the same month. Sales of existing homes fell as well, despite expectations for a gain....