Housing Climbing Back

I would be remiss if I passed on making a quick comment regarding real estate. The steady climb back continues.

This is not a rapid recovery, but it is consistent and prolonged. Sales of existing homes rose 3.4% in April, making it the tenth straight month of growth, and bringing the level of activity to 10% higher than a year ago. What’s better is that the portion of activity represented by distressed sales has shrunk, leaving regular sales as the driver of growth.

All this is good news.

There is one oddity in April’s numbers: prices rose 10% over last year’s level. While it helps to get house prices to level off and to stop falling, it cannot help if they suddenly start a renewed boom. That won’t happen while so many households continue to reduced debt, but we need to keep a sharp eye on these numbers over the upcoming selling season. The decline in distressed sales will have caused prices to appear to jump simply by removing those houses with depressed prices. As that distressed inventory is reduced further we may well see one or two more months of apparent price spikes as the statistics start to reflect only “normal” sales.

It seems that sellers are getting the message: the number of homes available for sale rose also, with the unsold inventory now standing at 2.45 million homes, or between six and seven months of sales at the current pace.

Of course all the normal caveats apply: the level of sales is still way below its peak, and is also way below where it would be were the economy ticking along smoothly.

But let’s not naysay.

Things are getting better.