Thursday, December 28, 2006

Were Housing's Troubles Just the Market Taking a Breather?

It appears the U.S. housing market is stabilizing and may have already bottomed? Are we going to follow our UK bretheren and rebound after a 12-15 month breather (See previous months posts)? Time will tell...........

End of Housing SlumpSeems to Be Drawing Near

WASHINGTON -- Recent firmness in mortgage applications and an increase in new-home sales suggest the housing slump may be nearly over, limiting the risk of wider damage to the overall economy.....

....The four-week moving average for the MBA's purchase index, which offers a less-volatile picture of the trend, has risen 12% since August, while the four-week average for the group's refinancing index has soared more than 41% since July....

....A recent pickup in new-home sales also points to stabilizing demand. The Commerce Department said yesterday that new-home sales rose 3.4% in November to an annual rate of 1.05 million units. While that pace is down more than 15% from a year earlier, it has risen since July and has held fairly steady in recent months.....

..."The net of all the numbers we've gotten is that it looks like the housing market and home sales appear to have stabilized, at least temporarily, in the latter part of the year," said Thomas Lawler, a former economist for Fannie Mae who now runs a consulting firm in Vienna, Va.

...Last month, there were 545,000 new homes on the market, or the equivalent of a 6.3-month supply at current sales rates, according to the Commerce data, down from a recent high mark of a 7.2-month supply in July.....

Christopher Conkey - WSJ

2 comments:

Sippn said...

If you look at the Commerce Department's report, they include in the housing inventory number what you may not expect... empty lots, homes under construction and what we expect... finished homes.

http://www.census.gov/const/newressales.pdf

Page 4 bottom right in the completed column - 169,000 homes, a little over 2 months supply.

Also, the way they count, a 4 month supply is about the lowest we ever get in the hottest market.

Dr. Brightside said...

Good eyes. Thanks for the info, very helpful in attempting to diagnose how long the "hangover" will last.
With that info on page 4 if you look at the number of homes under construction we are currently less than the 2005 average. Completed homes is still high so once the buiders work through their backlog stabilization should be coming soon if not already there.

thanks again for the insight.