2012: The Year of the Housing Recovery, Part III
More positive housing data:
1. The National Association of Realtors (NAR) reported today that its Pending Home Sales Index (PHSI) rose by 12.4% in July above a year ago, and reached the highest level since April 2010 when buyers rushed to take advantage of the first-time homebuyer tax credit that expired that month. The PSHI is a leading indicator of future housing sales activity based on contract signings for existing homes. July's year-over-year increase in the PHSI was the 15th straight month of back-to-back increases in pending sales of existing homes.
The average for the PHSI in 2012 through July of 99 is far above the annual averages for 2009 (95.0), 2010 (89.3) and 2011 (89.9), suggesting that the rebound in homes sales so far this year will continue into the fall and might even accelerate. Regionally, the largest annual gain in the July PHSI was for the Midwest, which registered a 20.2% increase in pending home sales, followed by the South with a 15.6% gain.
2. Sales of single-family homes in Massachusetts rose almost 27% last month compared to July 2011, and posted the highest sales volume for the month since 2005.
3. A post at Bonddad Blog titled "It's Not Just Case-Shiller: Almost Every House Price Index Everywhere Has Bottomed" reviews about a dozen home price indexes before concluding:
At this point, every single asking price index has turned positive. So have mean and median sales prices of existing homes as reported by both the NAR and Core Logic on a non-seasonally adjusted basis. Since both of these have turned positive YoY, it is not a matter of seasonality. So have 5 out of the 6 repeat sales indexes, including Core Logic, FHFA, Lender Price Services, Zillow, and as of this morning on a YoY basis, Case Shiller. Only the FNC repeat sales index, which is down -0.2% and likely to turn positive YoY within a month or two, and the very erratic Census Bureau mean and median new home sales price index, are not positive on a seasonally adjusted or YoY basis.MP: Given the shortage of housing inventory around the country, the release of foreclosed properties might actually help the real estate recovery, at least in terms of home sales.
While the permabear Doomers will stamp their feet, the simple fact is that there is now overwhelming evidence that the housing market has bottomed exactly when I said it would. The only question now is whether it is a long term bottom, or whether it might still be undone by the long-fabled but yet to appear foreclosure tsunami.
5 Comments:
"While the permabear Doomers will stamp their feet, the simple fact is that there is now overwhelming evidence that the housing market has bottomed exactly when I said it would. The only question now is whether it is a long term bottom, or whether it might still be undone by the long-fabled but yet to appear foreclosure tsunami."
this seems like a bit of an oversimplification of the question.
i think we also must ask "what effect would a normalization of interest rates and or a cessation of huge federal subsidy programs (freddy, fannie, FHA, etc) have?"
notions that it is either a foreclosure tsunami or ever onward an upward seem a bit simplistic.
there has been some real recovery. i do not think anyone sane is arguing that market conditions are not better than 2 years ago.
but to stick to the housing metaphor, one can question the foundation upon which this recovery is built: all time low interest rates and federal programs subsidizing somehting like 90% of mortgages.
Lots of private equity is pouring into mulit-family development deals. I've drafted more construction contracts for large multi-family projects in the last 3 months than I did the last 3 years. I also spoke to a client who is one of the largest distributors of drywall in the US and he says business is up 15% year over year and the trend is looking real good. Maybe it all comes crashing down if interest rates tick up but I doubt it.
it's a bit of a paradox though. We have this stubbornly high unemployment level and unemployed people don't buy major stuff much less houses and yet many "indicators" like housing and manufacturing sales....etc are "up" and if you believe the posts here in CD - record "ups".
is it possible to have a booming economy AND high unemployment?
or is "high" unemployment more of a historical but arbitrary number?
is it possible to have a booming economy AND high unemployment?
Hang on a second. The growth rates are at record levels. They are high because they are coming off deep lows (in the case of housing, anyway). The absolute level remains low, but when discussing economics, the absolute level is not as important as the rate of change. We can say the housing market is in recovery because growth rates in prices, starts, and sales are rising even though the level still remains low. There are some who take exception to this, but they are wrong.
For example, you know Spring is coming because the weather is slowly getting warmer, the bids come back, and green grass starts to poke through the snow. If you wait until the birds are in full force and all the tress are green to declare Spring is here, you'll miss the first three months.
'New' home monthly mortgage payments are back to the levels of the late 60s, even without CPPI adjustments.
http://www.nowandfutures.com/images/mortgage_housing_pay_cpi_lies.png
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