Have housing prices bottomed? If not, when will they?
Not this month, for sure.
Sales of new U.S. single family homes fell for the first time in three months in May, but inventories of new homes for sale reached record lows and the median sales price rose slightly, a government report showed on Thursday.
The Commerce Department said May new home sales fell 2.1 percent to a seasonally adjusted annual rate of 319,000. Analysts polled by Reuters were expecting a slightly slower pace of 310,000 for the month.
The decline ended two straight months of strong gains, with sales rising 6.5 percent in April and 8.9 percent in March. May's new home sales were 13.5 percent above the May 2010 level.
Barry Ritholtz at the Big Picture Blog has recently chimed in on the question, and in response Calculated Risk chimed in.
Barry posted this projection in Case Shiller 100 Year Chart
click on chart for sharper image
Based on the Upward Slope of Real House Prices Calculated Risk does not think home prices will fall as Barry suggests.
I've argued that "In many areas - if the population is increasing - house prices increase slightly faster than inflation over time, so there is an upward slope for real prices."Japan Nationwide Land Prices
Sure - house prices could overshoot to the downside. But the projection on the first graph of close to 25% in further real price declines is probably excessive. Right now the real CoreLogic HPI is less than 5% above the trend line (it could overshoot), and the Case-Shiller national index will probably decline sharply in Q1 too and not be far above the trend line.
The following charts are from a friend who goes by the name "BC".Please compare the above projections with recent charts by Calculated Risk.
click on chart for a much sharper image
Housing Starts 1959 - Present
click on chart for a much sharper image
Those looking for a housing bottom anytime soon are likely to be disappointed.
Note that the current boom has lasted well over twice as long as any other. If the bust lasts twice as long as any other, 2012 just might be a rather optimistic target for a bottom.
Donald Luskin at SmartMoney is making a case that Housing Prices Near or at BottomClick on above link for my rebuttal.Today home prices have fallen so much, mortgage rates are so low, and personal income is so high — that homes are more affordable today than at any other time, ever — with mortgage payments on the average home eating up about 40% of income.
With houses more affordable than ever before, why should we expect prices to fall much further from here?
Let's put it in concrete terms — jobs. Since the housing market started coming apart two years ago, jobs in the housing sector — broadly construed, to include everything from bricklayers to mortgage brokers — have already declined by over 1.5 million. That's about 1% of the whole national labor force, and it takes housing employment back to where it was in 2000 before the so-called "housing bubble" even got started. Which begs the question: How many more jobs are there to lose in this sector?
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