The road to a housing recovery
Although housing continues to present mixed signals, Trulia has offered a major vote of confidence in the sector, today retiring the Trulia Housing Barometer which they’ve measured since February 2012, rounding up construction starts, existing home sales, delinquencies and foreclosures relative to their worst point during the crash and their long-term, pre-bubble “normal” levels. As of August, Trulia reports the housing recovery is 67 percent back to normal, the highest level since the recession.
Leaving on a high note as the housing recovery begins to really gain traction (although not in “recovered” mode yet, only little more than half way there), Trulia reports this month’s index is led by improvements in sales, but welcome news is that delinquency and foreclosure rates that fell 8.86 percent to their lowest level in over five years, putting them squarely at 60 percent back to normal.
New home sector still down, existing sales way up
Additionally, the recovery is fueled by construction starts which rose 1.0 percent from July to 891,000, fully 40 percent back to normal. New home construction was the hardest hit sector, between restrictive financing for builders and buyers, and painful uncertainty in policy changes and unemployment. While 40 percent is the lowest read of the Barometer, it is improvement, nonetheless.
Existing home sales rose to their highest level in six and a half years, hitting 5.48 million, 99 percent of the way back to their normal 5.5 million level, even though foreclosures and short sales still make up roughly one eighth of all existing home sales.
A nod to Keynes
“When we created the Housing Barometer eighteen months ago,” Trulia Chief Economist, Dr. Jed Kolko, said, “all measures of the housing recovery were far from normal. Since then, the recovery has surged ahead in many ways but languished in others. Existing home sales are 99% back to normal, while construction is just 40% back to normal. Tracking the recovery’s progress as a single number is not the best approach anymore.”
Dr. Kolko noted that a great economist (possibly Keynes) once asked: “When the facts change, I change my mind. What do you do?” Asserting that the facts have changed, Trulia will be announcing a new approach to tracking the progress of the housing recovery.