22 March 2012
Housing Market Continues Recovery
The National Association of Realtors® reported February 2012 homes sales of 4.59 million on a seasonally-adjusted annualized rate—a gain of 8.8 percent when compared to February 2011. That’s really good news for the housing market since home prices typically follow the trajectory of sales numbers, although lagging 18 to 24 months. Dr. Ted C. Jones provides the following graphs and analysis based on NAR’s recent release.
Finally, some solid, good news for the national housing market not created by an artificial tax stimulus.
To remove the seasonality noise from the data, the following table shows a 12-month moving average of existing home sales. Focus on the rising sales numbers in the red circle below and realize that the market indeed is recovering. Existing home sales on a 12-month moving average basis have now increased in six of the past seven months.
Home values may have finally stabilized, after declining almost 27 percent from the peak in July 2006. This now makes three months that prices (on a 12 month moving average) have remained static. I am calling a bottom to the housing market at this time.
While home sales and prices are far off of the 2002 levels (which I consider normal given that period was following the 2001 recession and prior to the stupidity of subprime lending which caused the bubble), sales numbers are finally increasing and prices have stabilized. I truly believe that housing has turned the corner to recovery—and that is great news.
To read the entire NAR press release, click: http://www.realtor.org/press_room/news_releases/2012/03/ehs_feb