Housing recovery underway says the Mortgage Bankers Association
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PrintThe Mortgage Bankers Association (MBA) is confident that a housing recovery is underway. The MBA points to several reports on recent housing market conditions that they believe reinforce the view that home sales are in the process of recovery after reaching bottom in January 2009. Some of the factors for this optimism are that both existing home sales and new home sales increased strongly in July, marking the fourth consecutive monthly increase. In addition, the MBA states that July housing starts provide further evidence that single-family home building activity has also recovered somewhat after reaching bottom earlier this year.
New home sales up
New home sales have been up about 32 percent since reaching their record low in January. Existing home sales have been about 17 percent higher than their record low in January.
The MBA states that the first time home buyer tax credit likely helped boost sales since a larger share of home sales tended to be concentrated in lower priced homes. Inventories for new homes declined in July for the 27th consecutive month. Since their peak in July 2006, inventories have declined by 52.6 percent, reaching the lowest level since March 1993. The drop in the number of homes available for sale and the jump in sales pushed down the months’ supply to 7.5 months in July from 8.5 months in June, the fourth consecutive monthly decline. The months’ supply has declined significantly from the record high of 12.4 months reached in January. While this is the lowest level since April 2007, it is still higher than its long-term average of about six months.
Existing home sales
For existing homes, the number of homes available for sale has declined about eleven percent from a year ago. The months’ supply was unchanged in July at 9.4 months, declining from 11.0 months a year ago. However, rising foreclosures continue to add to inventories, and many owners and investors may likely list their properties if the market begins to recover, after holding these properties off the market for the past year. Not all foreclosed homes are listed in the Multiple Listing Service and therefore will not be reflected in the reported months’ supply figures.
Home price index
The MBA says that repeat home price measures, which are the most useful in tracking home price trends, have shown signs of stabilization. The S&P/Case-Shiller seasonally-adjusted home price index showed that, nationally, home prices increased in the second quarter for the first time since the first quarter of 2006. The monthly composite home price index for 20 cities posted an increase in June for the first time since May 2006.
