Chicago Market Up in 2nd Qtr

The Illinois Association of Realtors announced Tuesday that home sales were up 67% in the 2nd quarter versus the 1st quarter of 2009.  The year over year numbers are still down versus 2008 however.  Also a good sign is the fact that home prices actually increased 7% as well.  When higher sales are driven by weakness in pricing you can argue that there is still uncertainty in the market, but if pricing and numbers are going up, that signifies true demand.  Source: Chicago Tribune

Housing Poised to Recover in 2010

According to Jim Haughey of Reed Construction Data the federal stimulus package is starting to work and we should see a return to growth during 2010.  Spending on single family residential housing is forecast to grow 10% next year, with 528,000 units expected versus a predicted 375,000 for 2009.  The fact that there are conflicting signals between consumer confidence (bad) and the housing numbers (good) indicated that there is a chance for the market to make a turn upward.  Source: Builderonline.com

Spec Homes Needed for Tax Incentive

One of the side benefits of the $8,000 federal tax incentive for home buyers that it is driving the housing market by prompting builders to put up spec homes.  It seems almost counter intuitive that people wouldn’t just buy up the current inventory.  However the tax incentive requires that people close on their homes by Dec. 1st.  If the buyer cannot find a home by then, the potential buyers lose out.  From a builders’ standpoint, they have to have something ready to sell when that buyer walks in.  It won’t do any good to sign a contract in November for a house that won’t start construction until April.  So in  response, some builders are ‘stocking up’ by building spec homes.  The bad news is that this push will probably fade by the end of October.  Source: http://www.bigbuilderonline.com/industry-news.asp?sectionID=363&articleID=1031517

Housing Impact on Economy

I read this good article on how the housing market is having an impact on the economy overall.  In short, when housing isn’t doing well it has a HUGE impact on the overall production numbers.  The author cites decreased inventory and increased sales as being positive but that the jobs market is still driving foreclosure levels to remain high.  Sure, we have heard that from several sources lately but it serves to stress that the economy is a much larger machine than just the housing sector.  We have to get jobs, banks, the auto industry, AND housing all back on track.

Mixed Responses to June Data

There are a lot of views being thrown around in the blogosphere during the last week or two regarding the new sales data released for June ’09. It seems that there is a lot of “spin” going on depending on which outlet you read. I try to be positive and in general I think that if everyone thought more positively then we would already have our recovery instead of sitting around waiting for it. Having said that I think when statistics are used they should be clear and unfiltered. So I wanted to lay out some facts garnered from lots of different sources, but primarily the NYT, Bloomberg, and WSJ:

· The June gain of 11% was based on an extrapolated annual estimate using seasonally adjusted monthly rate and still represents a significant drop from a year ago.

· The unadjusted numbers still show the slowest June sales since 1982.

· The gain in number of homes sold also comes at the expense of lower prices per home.

· The report in June was stronger than anticipated by most economists and a bit of a good surprise.

· The single family housing starts have been on a four month rising trend.

· Low interest rates and government incentives are spurring home sales, assisted by lower prices on existing homes.

· Sales appear to be strongest in the Midwest and West and leveling off in the South and Northeast regions.

· The length of time that a new home sits before being sold is at an all time high of 11.8 months.

· Homes sales numbers will continue to be sluggish until the unemployment numbers start recovering, which is generally looked for in 2010.

· The inventory of homes is currently low but the sale rate does not yet support a large jump in building. (Low inventory, but also low demand)

· The NAHB housing index bottomed out in January and has risen since. The index is still below 50%, indicating pessimistic outlooks by builders.

Home Sales Up, Inventory Down

Reuters reported that the Commerce Department announced that home sales rose 11% in  June which is the largest monthly increase since 2009, almost 10 years.  In addition the inventory of homes for sale is at the lowest point in 11 years.  With interest rates still fairly low this should be great news for the building sector.  Now if we can curb unemployment so buyer confidence returns we should be on our way to recovery!

Home Pricing Up Slightly In May

Some areas of the country are starting to rebound in pricing within the last few months according to the Federal Housing Finance Agency.  Although prices have declined 5.6% from May 2008 to May 2009 the prices were up 0.9% which is far better than the –0.2% drop expected by a Bloomberg survey of Economists.   Bloomberg.com

Builder Confidence Index Up

The NAHB index of builder confidence rose to 17, the highest number since September of last year.  Readings below 50 mean that conditions are unfavorable.  Buyer interest has been increasing due to the lower home pricing, low interest mortgages, and tax credits.  Economists are forecasting an economic recovery during the second half of the year, although the article does not say if this means a leveling out or an actual growth trend.  Reuters.com

San Francisco Home Sales at 3yr High

Condo and home sales are up in the Bay Area by 20% versus last year and at a 3 year high, according to Bloomberg.com.  The average price dropped by 27% during the same period.  The drop in available jumbo loans (for purchasing expensive homes) and increase in foreclosure sales likely drove prices down.  I say in any market where the inventory is shrinking, growth is soon to be found!

Record Sales in Buffalo, NY

The month of June seems to have been a good month for many areas of the country, and set a record for the number of homes sold in that month for Buffalo NY.  The area sold 1,169 homes last month which was the highest amount sold in June in the past 15 years.  The number also represents a 29% increase from May.  Prices were steady and the growth is attributed, as usual, to the $8,000 Federal tax credit.  Read more at The Buffalo News.

Home Sales Up in Lubbock, TX

Inventories are down and home sales are up in Lubbock, TX.  Year to date prices have gone up by 11% versus 2008, and monthly June sales have increased by 2% with prices up 5% versus 2008.  Local officials are optimistic that such numbers will soon spawn a revitalization of the construction sector.  With inventory declining and prices rising, it should only be a matter of time.  Via LubbockOnline.com

MO Housing Sales Steadying

Thankfully we are starting to see some reports of housing turning around lately.  This one comes from Cape Girardeau County, Missouri where only 3 less homes closed last month than the same period in 2008.  Especially noteworthy is the fact that the average home price was UP.  The average year to date numbers are still down versus last year, but only by a small amount.  Read more at the SE Missourian.

Home Sales Steady in Des Moines

A little positive news this morning from the Des Moines Register, where home sales appear to be evening out.  Year over year figures are basically steady while prices have dropped slightly.  The good news is that realtors are starting to report that more buyers are coming forward, a good sign indeed.

New Homes and Prices Up in California Communities

A small nugget of positive news comes from California, in which several metropolitan areas are seeing year over year growth. Of course this is California and who doesn’t want to live there, right? Nevertheless, Vallejo – Fairfield had average home prices increase by 17% which is pretty darn good considering the rest of the economy. Heck it even beats any investment plan that I know of. Read more at Timesheraldonline.com.

Texas Home Sales Down in 2nd Qtr

Dallasnews.com reports that the Dallas - Fort Worth region is experiencing the lowest quarterly sales data since 1991. The sunny part is that while the sales have been poor, new home starts are even further down which helps lower overall inventory. Not the best news, but the report seems optimistic that the overall market is at least stabilizing. And we have to stabilize before we can start building again!

Existing Home Inventory Hurting New Home Sales

While new home sales continue to be be a thorn in the economy’s side it is the ‘buy used’ mentality that seems to be hurting most. It certainly seems obvious that buyers would shop new homes against what they could potentially buy on the existing market. But if you combine that fact with the slide in home values (also related to the supply side of the equation) and new homes have trouble competing. Read more at CNNMoney.