Housing Market on Its Way Back to Normal

September 11, 2012 / Russell Legato, Residential Property Analyst

Housing market recovery rates are pointing towards a move back to the normal range. The Trulia’s Housing Barometer charts report each month on its status. There are three major indicators of this status. They are constructions starts, sales of existing houses and what is called the delinquency-plus-foreclosure rate. Every month the data in each category is compared to the status of the numbers at their worst level and what the pre-bubble normal status level was.

Housing Market on Its Way Back to Normal

This year the July status showed a level rate of new construction starts and a healthy increase in the sale of existing homes. However, there was a decrease in the delinquency-plus-foreclosure-rate.

A promising increase occurred in sales of existing houses. In June of 2012, 4.37 million sales took place. In July 4.47 million homes were sold. As compared to the lowest level that took place during the worst of the bust, those sales are 40 percent closer to what is considered the “normal” level.

The fact that construction starts did not decrease much at all is another promising trend. In July of 2012 they were at an annualized rate of 746,000. Figured on a year over year basis that shows a 21.5 percent raise. Figured on the national level, construction starts are more than a quarter of the way back to normal compared to what they were during the worst of the bust.

There are differences in construction starts depending on geographic location. These numbers range from way below normal levels in Sacramento, Detroit and Chicago to what are considered normal in Austin and Houston Texas and San Jose Calif.

In July of 2012, more than 11 percent of mortgages were either in foreclosure or delinquent (behind in payments). News is good on the national level with 36 percent returning to normal. Some areas still have a surplus of foreclosures to be dealt with. They include New York, Illinois, New Jersey and Florida. Miami is an exception in that state and is well on the way back to normal. Predictions reported by experts are that by 2016 the housing market recovery rates will have taken full effect in most areas on average. It is possible that pockets of problem areas will still exist, however.

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