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Spencer Rascoff, chief executive officer of Zillow, talks about the outlook for the U.S. housing market. He also discusses Zillow’s growth and initial public offering. Source: Bloomberg, November 3, 2011. 
Robert Shiller, an economics professor at Yale University and co-creator of the S&P/Case-Shiller home-price index, talks about the U.S. economic outlook and housing market. He discusses consumer confidence and the impact of government stimulus measures on economic growth. Source: Bloomberg, June 14, 2011.
The property lobby consistently argues that the driving force beneath rising house prices is a rising population. Even a cursory examination of the data shows that this is not true, argues Steven Keen, associate professor of economics and finance at the University of Western Sydney. The real force is accelerating mortgage debt, as he explains in the video below. (Read more about Keen’s views on his DebtWatch blog.) Source: YouTube, June 9, 2011(hat tip: Financial Doom Blog). More on this topic (What's this?) Market Update May 9, 2011 (Dividend Stocks, 5/9/11) The population-house price myth, according to Steven Keen (Wall Street Sector Selector, 6/13/11) It’s The Debt, Dummy (Wall Street Sector Selector, 6/12/11)
This post is a guest contribution by Asha Bangalore, vice president and economist at The Northern Trust Company. Sales of new single-family homes rose 7.3% to an annual rate of 323,000 in April after an 8.3% increase in March. The record low sales mark of new single-family homes is 278,000 seen in August 2010 (see Chart 1). Essentially, sales of new homes continue to bounce around the record low reading after seven quarters of economic growth. Sales of new homes increased across all regions of the nation, with the West posting the largest gain (+15.0%) and the South the smallest increase (+4.4%), while the sales performance in the Midwest (+4.9%) and Northeast (+7.7%) was moderate.
The number of homes for sale in April at 175,000 hit a new all-time low (see Chart 2), which is encouraging for home building activity. But, the home builders survey continues to send pessimistic signals.
The inventory of unsold new homes fell to a 6.5-month supply in April, which is close to the historical mean of 6.3 months. The median price of new single-family homes rose to $127,900 in April from $214,500 in March and posted a 4.6% increase from a year ago. The April report of new home sales shows an improvement in terms of higher median price, lower inventory of unsold homes, and an increase in sales. However, a near term sustained increase in home sales is unlikely until a sustained drop of the employment rate emerges.
Source: Asha Bangalore, Northern Trust – Daily Global Commentary, May 24, 2011. More on this topic (What's this?) Rebound of new home sales impressive, but level still close to record low (Wall Street Sector Selector, 5/26/11) Market Down Despite Better Sales (Daily US Stock Market Fundamenta..., 5/24/11) New Home Sales Pop in April, Inventory Hits Lowest Level Ever (Wall Street Sector Selector, 5/26/11)
The latest round of US housing data shows the real estate industry continuing to struggle. For some perspective, Chart of the Day provides the graph below showing the US median price (adjusted for inflation) of a single-family home over the past 41 years (top section), as well the annual percentage change in home prices (also adjusted for inflation) (bottom section). “Prior to the financial crisis, the inflation-adjusted median home price rarely declined more than 5% in one year (gray shading),” said Chart of the Day. “It is also very important to note that due to a large number of distressed properties, a high unemployment rate and stagnant wages, the inflation-adjusted median home price has declined 7.9% over the past year – an annual decline larger than any that occurred during the 35 years prior to the financial crisis.” There may already be some property bargains around, but housing in general still has a long convalescence process ahead.
Source: Chart of the Day, May 20, 2011. More on this topic (What's this?) Romney Avoids Nevada's Housing Market Problems with a Tactic That Could Work – for Now (Money Morning, 2/3/12) April Home Prices Get Seasonal Boost But Double-Dip Still In Progress (Black Swan Insights, 5/8/11) Housing Market Will Weigh on US Economy For Years (Wealth Daily, 6/3/11)
In the paragraphs below, BCA Research provides its take on the latest U.S. housing data. “According to the Case-Shiller data, U.S. house prices continue to decline, although on a short-term basis, the pace of declines has slowed. “Case-Shiller house price indexes are about to breach the cyclical low, set in the spring of 2009. Unfortunately, the spring home buying season is getting off to a slow start according to survey data, implying that further house price declines are likely. With inventories – especially in the distressed property market – still very high, it will likely take more house price weakness before the market finally finds a floor. “Nonetheless, there are some tentative signs that fundamentals are moving in the right direction. Foreclosure rates, while still high, appear to have peaked. Income and employment trends are gradually becoming more supportive, although lending conditions are still quite tight. “Although we expect more weakness in U.S. existing home prices over the next several months, a turning point may be achieved by late 2011. Resolution of the ‘robo-signing’ foreclosure problems would be a strong positive for the housing market. We recommend keeping a close eye on foreclosure rates and total housing supply to indicate a sustainable stabilization in the residential real estate market.”
Source: BCA Research – Daily Insights Service, April 28, 2011. More on this topic (What's this?) Case-Shiller Home Price Index: U.S. Housing Market Nearing Bottom in 2012 (Money Morning, 1/31/12) Case-Shiller Index: The Housing Recession is Not Over (Wealth Daily, 3/29/11) Case-Shiller: The Double-Dip Has Arrived (Wealth Daily, 2/22/11) |
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By Prieur du Plessis, on November 4th, 2011 posted in: 
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