Monthly Archives: June 2011

It certainly takes plenty of determination to find the opportunities in today's housing market. Last week the National Association of Realtors (NAR) reported Existing Home Sales down 3.8% in May to an annual rate of 4.81 million units, a six-month low. The median price was up for the month, though down 4.6% from a year ago. Inventories declined, but the months' supply increased to 9.3 because of the slower sales rate. Nevertheless, the NAR's economist opined, "...sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year."

What was gaining on us last week were May Housing Starts, up 3.5% for the month to a higher-than-expected 560,000 unit annual rate. The gain included a 29% increase in multi-family starts, which are now up 17.5% over a year ago. New building permits were also up in May, by 8.7%, to a 612,000 annual rate. Permits indicate the level of starts a short time out, so some economists see the beginning of an upward trend. With the number of homes under construction at the lowest levels on record back to 1970, and as inventories continue to come down, home building will certainly need to grow considerably.

There are those who think the housing market is in bad shape, with the start of a second dip in home prices. Then there are those who see something better -- a bumpy bottoming of home prices, which will soon head back up. Those of us in the second camp were given more ammunition last week by real estate data company Altos Research. Their evidence shows prices bottomed out in March and achieved seasonal rises in April and May. Their VP of market analytics said in a recent webcast: "We're pretty confident that means there is going to be a rebound.... There's still plenty of movement upside and we're going to probably move...back into positive ground."

Last Tuesday another housing market obstacle appeared in the form of Standard & Poor's Case-Shiller Home Price Index for March. Prices for 20 major metro areas dropped 0.8% for the month and were down 3.6% from a year ago. These numbers had some folks claiming the double dip in housing prices had arrived. But Case-Shiller's longer term data reveals that in their 20 measured metros, home prices are still UP 38.2% since January 2000.