Sunday, November 29, 2009
Have home prices have already bottomed?
First, the Case-Shiller index is up five months in a row–a sign of substantial strength.
Second, pending home sales are up eight months in a row–the longest streak since measurement began in 2001.
Third, the inventory of new homes at the current sales rate was 6.7 months in October, the lowest since December 2006. As Mark Perry observes, that’s “just slightly above the average inventory of 6.13 months, based on new home sales data going back to 1963.” Perry provides the following chart:
Fourth, the number of new housing starts is at a 50-year low. (At least. Records don’t go back further than 1959.)
Fifth, mortgage rates are at a 38-year low. (At least. Records don’t go back further than 1971.)
Sixth, exuberant demand and limited supply in many post-bubble cities are leading to bidding wars, especially (but not exclusively) for low-end properties. In San Diego, prices are up 14 percent in the past eight months. In Las Vegas, where bidding wars are the norm, buyers are “going crazy.” Some California cities, like Bakersfield, report unsold inventory of just two months. San Diego reportedly has just a 1.5-month supply of low-end homes, despite a steady stream of foreclosures.