Real Estate Outlook: Signs of Recovery
By Kenneth R. Harney1
If you've been waiting for rock-solid statistical evidence that the housing market – and the national economy – are well along into recovery mode, you definitely got it last week.
Sales of existing single family homes jumped by 7.3 percent in March, according to the National Association of Realtors survey released last Thursday, and were 13 percent above year-earlier levels.
Median home prices were up as well, despite the heavy presence of foreclosures and short sales being pumped into the listing inventory. Median single family prices were up by 9 percent year over year in the Northeast region, and by about 7 percent in the South, Midwest and the West.
Meanwhile, unsold inventory dropped by two percent in March, and is now 22 percent below its peak in July 2008.
Lawrence Yun, chief economist of the National Association of Realtors, said the recovery is now "broad" and unmistakable "in nearly every part of the country," thanks in part to improvements in the national economic outlook and the spur to sales being exerted by the expiring housing tax credits.
Home builders are clearly getting the upbeat message about the recovery as well. March single family housing starts rose by 1.6 percent to their highest level since November of 2008.
New permits – a gauge of where builders expect market demand to be six months or more down the road – were up by seven and a half percent for the month, and are 34 percent higher than they were in March 2009 - the biggest year over year gain in permits since 1992!
The latest weekly measure of new home purchase loan applications, compiled by the Mortgage Bankers Association, jumped by 10 percent – which is attributable in part to the April 30 contract deadline for the $8,000 and $6,500 federal tax credits.
Consumer confidence and expectations about the national economy also are on the upswing, up by 6 points last month, according to the Conference Board. The board's widely watched index of leading economic indicators registered a gain of 1.4 percent for the month.
Fannie Mae's economics department issued its forecast for the balance of the year last week - and the tone was moderately optimistic. Fannie projects national economic growth - as measured by the gross domestic product or GDP - to gain about 3.1 percent this year.
That won't be enough to make a major dent in the jobless rate, said the economists, but it should reflect a slow but steady improvement in key employment sectors, including manufacturing. Bottom line this week: Think positive. Because that's where we're headed in real estate and the economy overall.
1 Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation.
He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.
Reprinted with permission from Realty Times, April 28, 2010. Copyright 2010 Realty Times. All Rights Reserved. www.realtytimes.com
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