Let's continue our look at the possibility of a second half rebound by looking at housing. We'll first look at new home sales, which account for a small portion of the real estate market.
Look at the data from the long term perspective, new home sales are still at very low historical levels. However
Note the increase over the last 9 months, where we see an increase form a ~300,000 annual pace to an ~360,000 pace.
This is the chart that I find most important: new home inventory is not at very low levels historically. That means builders will have to bring more inventory on line soon, which is exactly what we're seeing:
Building permits for i-unit structures are clearly increasing, and have been for about a year and a half.
Let's turn to the existing home market.
The overall sales sales pace has been pretty constant for the last two years. Notice that this is in line with the historical norms of the early 1990s.
This, for me, is the defining chart of the housing market. The overall months of supply is down to far more realistic levels in a months available for sale measurement and
and absolute amount of inventory measurement.
Also note that home prices are now rising:
Home prices rose for
the fourth month in a row in May, suggesting the recovery in the
housing market continued to gain traction, even as the broader economy
The S&P/Case-Shiller composite index of 20
metropolitan areas gained 0.9 percent in May from April on a seasonally
adjusted basis, topping economists' expectations for a 0.5 percent gain.
"Real estate continues to show improvement off
the bottom. That's one of the few encouraging signs we've seen," said
Subodh Kumar, an investment strategist at Subodh Kumar & Associates
On a non-seasonally
adjusted basis, prices fared even better, jumping 2.2 percent. Compared
to a year ago, price declines moderated to slip 0.7 percent, the
smallest drop since the last time year-over-year prices rose in