Pending homes sales figures were just released for December. Here’s what the numbers showed:
* Sales rose 1% between November and December. That was right in line with what economists were expecting.
* At 96.6, the index was up 10.9% from the year-ago level of 87.1.
* By region, pending sales were broadly higher. They climbed 2.2% in the South, 2.3% in the Northeast, and 5.2% in the Midwest. Sales fell 3.8% in the West.
The pending sales index stabilized at the end of 2009. That potentially sets the stage for a more positive spring selling season. Indeed, with mortgage rates low, house prices down, and the supply of homes for sale steadily falling, it’s easy to see why the market should stabilize.
At the same time, we lack a catalyst for a vigorous recovery. Unemployment remains a problem and the housing market is still dealing with the “hangover effect” from the bubble — too much foreclosure inventory, tighter lending standards, and so on. The result? We’ll likely just muddle through instead of witness a V-shaped recovery like those that followed previous housing busts.
{ 3 comments… read them below or add one }
Don’t forget that back log of foreclosures around the corner.
Mike Larson Reply:
February 3rd, 2010 at 8:49 AM
We have to stop imagining that some huge new wave of foreclosures is going to show up, all at once, at some point down the road. Foreclosures are ALREADY being parcelled out into the market each and every day. Yet overall supply is going down. That means there is net ABSORPTION in the market because demand is strong enough to absorb all that supply and then some. Moreover, other foreclosures will be held off the market almost indefinitely as the government gets more and more generous with its loan modification programs (and forebearance for lenders holding those properties). In other words, it’s not that I’m forgetting them. It’s that they are not going to be as big a problem as people expect.
Can you tell me when the housing market ever experienced a V shaped recovery after a serious correction? The most recent housing market collapse (prior to the current situation) was of the late 80’s early 90’s. It took until 2002-03 to begin any significant increase in value after a decade of stagnation in property values. The late 80’s-early 90’s decline is no comparison to today’s market conditions. The next step down in the r.e market will be in the next 12-36 months as long term rates rise, property taxes rise, utility costs rise (due to higher taxes levied from local, state, city and federal gov’t and higher commodity prices). Higher cost equals low values. I will leave out the steady unloading of foreclosures which will last for at least 5 years.
Your comments today on Churchill and the UK are thought provoking. (BTW, I want to single out you and your boss for doing fine work.)
The US not only has no Churchill it doesn’t have the Greatest Generation and world hegemony it had in 1945. Our share of world manufacturing peaked in 1951. Our oil production peaked in 1970. We as a nation are the world’s biggest debtor (in WWII we were the world’s lender, having replaced Britain in about 1915).
We need to become competitive in manufacturing. We need to borrow less and consume less (even though I am glad you enjoyed your vacation.) We need to transport less and burn less oil, esp., foreign. We need to recognize that the world is in a global reset, a period of reallocation of resources and shifting hegemony, and that we as a nation have the most to lose. That last is the hardest part of all.
When there is a retrenchment in US Government economic stimulus spending, there will be a relapse into deep recession and panic. That is what we must get ready for, because it will happen, whether as a matter of policy and politics or the collapse of markets and other economic mechanisms.