Last week was packed with housing market data and the news does keep getting better even though the media hasn't caught on quite yet. Wednesday saw December New Home Sales UP 17.5%, blowing away forecasts with a 329,000 annual rate. The supply of new homes dropped to 6.9 months and the new homes inventory slid to 190,000, down 66.8% from its 2006 peak and at the lowest level since 1968. More good news came with an 8.5% boost in the median home price versus a year ago, to $241,500, its highest level since April 2008. The average home price registered a 4.7% gain compared to a year ago.
Speaking of prices, the Case-Shiller home price index for the 20 largest metro areas was down 0.5% in November, better than expected. Although prices are off 1.6% in the past year, they're still up 1.2% from the low they hit in May 2009. Inspired by the November slip, pundits fretted about a possible "double dip" in housing prices. But a chart of the Case-Shiller index for the 10 largest metro areas shows the trend in prices, adjusted for inflation, is essentially flat, perhaps rising a bit, since early last year. And the nominal value of the index is almost 5% ABOVE its April 2009 low. A rational mind might conclude housing prices have finally bottomed, 5 years after hitting their peak.
Buyers are supporting this notion, sending Pending Home Sales, tracking contracts signed on existing homes, UP 2.0% in December. This report has now had three strong months in a row, so existing homes sales, tracking actual closings, should stay on the increase in January.
From my "Inside Lending Newsletter." Monday, January 31, 2011
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