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Housing Market Update - December 2012

Housing Market Update - December 2012

Home sales were down across the board in December, with new, existing and pending home sales falling 7.3%, 1.0% and 4.3% respectively (Table 2). On an annual basis, however, the statistics all point to a recovery in the housing market. This recovery is likely to gain speed in 2013 because rising home prices and interest rates are sending a strong "buy now" message to those on the sidelines.

The following table summarizes the preliminary annual numbers for 2012 and the extent of the improvement over 2011.

Annual Housing Statistics 2011-2012

The strongest indicators of the recovery are the residential construction numbers, especially permits and starts, and new home sales. Table 1 shows the progress made by residential construction in 2012, and Table 2 shows the new home sales numbers.

New Residential Construction - December 2012
New and Existing Home Sales - December 2012

Despite the lower reading for pending home sales (a result of dwindling inventory, according to the National Association of Realtors, who publishes the index), mortgage loan activity improved in January (Table 3). In addition, the S&P Case-Shiller index for home prices showed that the annual appreciation in housing prices was 4.5% for the 10-City Composite and 5.5% for the 20-City Composite. Only one market in the 20-City Composite fell--New York. Another--Cleveland--remained flat. The other 18 all registered improvement in November.

Mortgage Applications and Rates - January 2013

Mortgage interest rates lifted off of their historic lows, hovering between 3.6% and 3.7% in January. Together, higher home prices and signs that interest rates are increasing should send a strong "buy now" message to those who have been waiting for the market to hit bottom.

To see the effect that the housing market is having on lumber prices, read Matt Perkowski's Southern Pine Lumber Prices - December 2012.