December 20, 2012
THE CREDIT CRISIS PRECEDED THE HOUSING BOOM:
How Housing Is Driving Economic Growth (Dec 20, 2012, Daily Beast)
According to the NAR, the total housing inventory fell to a mere 2 million homes available for sale. Given the rate at which homes are being bought, that represents a meager 4.8 months supply, compared to 5.3 months in October. The inventory is reaching levels not seen since right before the housing boom entered its truly overheated phase: November's inventory was the lowest since September of 2005, when there were only 4.6 months worth of homes on the market.Another positive sign: the market is starting to clear out foreclosed homes and homes sold at a discount from the outstanding amount of the mortgage (short sales). In November, 2011, foreclosure sales and short sales were 29 percent of all home sales. In November 2012, they were only 22 percent, down from 24 percent in October. Lawrence Yun, the chief economist for NAR, predicted in a statement that "The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages." This bodes well for the economy as a whole. It's better when home sales are a money-making proposition, not a way for deeply indebted homeowners to cut their losses or for banks to get back whatever they can from delinquent mortgages.This steady increase in sales and steady decrease in existing inventory means one thing going forward: more building. Data from the National Association of Homebuilders shows that builders are more confident in the strength of the market for single-family than they have been since April, 2006. The NAHB data measures both the current sentiments of builders and their future prospects. The former is at such high levels now because some builders are starting to make money hand-over-fist again. Toll Brothers, the high end builder, saw huge profits driven nearly entirely by new building.In a statement, the company's CEO, Douglas C. Yearley Jr. said that "pent-up demand, rising home prices, low interest rates, and improving consumer confidence motivated buyers to return to the housing market in 2012."
Posted by Orrin Judd at December 20, 2012 6:35 PM