Main menu

Home prices are still weak, but very affordable

As these charts show, both nominal and real housing prices have declined to new post-recession lows, though the decline since the end of the recession in mid-2009 has been modest: between -3% and -7%. These price indices may well slip a bit more, but I don't think that is inconsistent with my view that we have seen the worst of the housing and residential construction bust, and that a slow recovery is now underway. Note that the prices reflected in these charts are an average of prices during the months of September, October and November, so they are rather old news. Plus, I think it's important to add that homebuilders' stock prices have jumped some 50% since the end of September, the National Assoc. of Home Builders' Market Index rose from 14 last September to a 4-year high of 25 in January, and housing starts rose 25% last year. Housing price indices such as these are most likely a lagging indicator of the underlying dynamics in the housing market; real-time data suggests we are seeing improvement on the margin. Furthermore, mortgage rates are now at rock-bottom levels (the nationwide average of 30-yr fixed conforming mortgage rates is only 4.07%), making housing more affordable to the average buyer than ever before.

Filled Under:


Posting Komentar