US Housing Trends Improve After Seven Years

July 20, 2012 / Russell Legato, Residential Property Analyst

It has been a seven year depression in the US real estate industry. Finally, there is a break in US housing trends. All indications show the slump is over and the market is improving.

US Housing Trends Improve After Seven Years

There are a number of significant indications to that effect. For one, after seven months of decline after decline, the S&P/Case-Schiller data on home prices is going up. When May of 2012 is compared to May of 2011, almost 10 percent more existing houses were sold.

Additionally, the supply of newly built houses has returned to the levels that existed in 2005. As for existing homes, the supply is comparable to the normal six-month level. There are only a fraction of homes that are unoccupied. When May 2012 is compared to May of 2011, there were 26 percent more housing starts on single-family homes in 2012. This is all good news to builders, suppliers and Realtors.

All segments of the housing industry will indicate increased strength in the general economy. More jobs translate to more people buying homes and conversely, more home buyers must hold jobs to enable them to get a mortgage.

The stock market trading last Thursday showed machinery and material for the construction industry to be leaders. Shares of Texas Industries (TXI), for one example were up by 5.5 percent. Another leader was Martin Marietta Materials (MLM) with shares up 1.7 percent approximately on that same day.

Pending sales on the national level increased in May of this year. The Pending Home Sales Index reflects the percentage of contracts that are signed. Reports given by National Assoc. of Realtors reveal an increase of 5.9 percent for a total of 101.1 in May, which compares favorably to the 95.5 total in April. Back in May of 2011 it was only 89.2.

Pending sales are defined as those in which a contract has been signed, but the transaction is still waiting to close. In most cases, the sale is finalized within a month or two following the signing. Pended sales are a term referring to those sales that were signed and waiting to be finalized during any given month.

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