SIGNS OF RECOVERY IN THE FOR-SALE MARKET
The joint center for housing study at Harvard University reports
The for-sale housing market remained depressed for much of
2011. House prices in most areas continued to slide, sales were
lackluster, and single-family construction hit a record low.
But as the year ended, steadier job growth and improving consumer
confidence boosted sales of both new and existing homes
With demand reviving and inventories of homes for
sale depleted, home prices may well find a bottom this year.
Moreover, stronger sales should pave the way for a pickup in
single-family construction over the course of 2012.
Nevertheless, a number of conditions may keep the recovery in
the owner-occupied market relatively subdued. The backlog of
roughly two million loans in foreclosure means that distressed
sales will remain elevated, keeping prices under pressure.
Another 11.1 million homeowners owe more on their mortgages
than their homes are worth, which dampens both sales of new
homes and investment in existing units. And despite recent
declines, the number of vacant homes is still well above normal,
limiting demand for new construction in many markets.
What the for-sale market needs most is a sustained increase
in employment to bring household growth back to its longterm
pace. But the persistent weakness in homebuilding has in
itself hindered a strong rebound in hiring. From 2006 through
2010, residential fixed investment pulled down growth in gross
domestic product (GDP) in all but three quarters, two of which
benefited from targeted tax credits. Since 2011 began, however,
home construction and improvement spending have made a
positive contribution to GDP in four out of five quarters. With
multifamily construction already on the rise, even modest
increases in the number of single-family starts—together with
stronger sales of existing homes and associated investment in
improvements—will bolster economic growth and, in turn, the
So that I don't overwhelm you with so much information, I will continue
this significant report in my next blog. Just think of it as a blogopera - lol