RealEstateEconomyWatch.com Insight and Intelligence on Residential Real Estate
Housing Market Index
(12-15-10 Release Date)
Dec Nov Oct Sep Aug Jul Jun May
16 16 15 13 13 14 16 22
Source: National Association of Homebuilders
Highlights
- The housing market index was unchanged in December at 16 from a month earlier.
- The housing market index was unchanged from a year ago.
Analysis
Homebuilder confidence has been flat since January of 2010. However, a level of 16 is extremely low from a historical perspective, reflecting very low confidence among homebuilders. The good news is low builder confidence has left the homebuilding industry with a relatively lean inventory of new residential construction.
Looking forward, the homebuilding industry is poised for a recovery but it will not occur until the foreclosure situation is settled. According to RealtyTrac, over 2.2 million properties are somewhere in the foreclosure process, contributing to an excessive inventory situation as well as downward pressure on home values. Homebuilders are not expected to gain any meaningful confidence until 2012.
Questions. What do you mean by a “cyclical” low? What cycle are you refering to? If the index were to hit a low of 7 next month would that constitute a cyclical low. Are you refering to some seasonal low? Was there a cyclical low in the recession of the early 90s?
Your answer would be most helpful in my understanding.
Rex Peters
economist Kevin Gillen of Econsult Corp., but Philadelphia’s market isn’t plguaed by large inventory the way Sun Belt cities such as Las Vegas and Phoenix are. We have not seen the catastrophic declines in new-home prices or new-home sales that a lot of other areas have, Gillen said.John Mangano, Toll Bros. group president for Philadelphia, Bucks, and Montgomery Counties, said this market was holding its own. Sales at Toll’s Naval Square, a mix of condos and town houses at 24th and Bainbridge Streets, are strong, and building of single-family houses in the suburbs is steady, he said. Of course, everybody knows it’s slow, Mangano added, but there are still buyers out there. People sitting on the fence for a long time are making moves every day. The Philadelphia market has never boomed like other areas, and it’s never hit the lows of other areas, either, he said.