Normally, housing markets are seasonal: they heat up in the spring — as nice weather encourages consumers to go outside and shop — and summer, as families try to get their kids settled before the school year. But this year, has spring already sprung?
Both new home sales and existing home sales are down a smidge in February from January — but up significantly year-over-year. The pace of sales may have crossed a critical recovery benchmark, and inventory has tightened dramatically even before the crucial spring selling season.
U.S. sales of previously occupied homes (which are increasingly relevant, as “new home sales” make up a shrinking sliver of the pie) were at 4.63 million units in January, down just a smidge to 4.59 million in February.
This data is from the National Association of Realtors, and it’s up in the air how trustworthy NAR numbers are after the association of more than 1 million realtors revised its numbers downward last year. But if the numbers are accurate, they represent a spring sales pace in the dead of winter. The numbers are up 8.8% from the figures of last year.
Of course a sales pace of 4.59 million homes annually still ain’t great (compare that to more than 6 million units moving a year during the boom) but I do at least think that anything over 4.5 million represents recovery. In volume, that is. Of course if you’re a home seller, you’re probably selling just your one house or apartment, and your greater concern is pricing.
On that front, yesterday’s release of the Federal Housing Finance Agency index, which tracks prices of homes with conventional mortgages (basically the slice of the market that represents starter and medium-priced homes, but not McMansions) shows that pricing was flat in January from the month before.
Given that pricing has been diving recently, even a flattening is decent news.
New home sales, meanwhile, came in today at a seasonally adjusted 313,000 units per year, a decline of 1.6% from January but a jump of 11.4% from the number a year ago.
Real estate bulls such as Steve Berkowitz, CEO of Move Inc., which operates multiple online real estate sites, point to tightening inventory as a hopeful sign. Berkowitz recently noted on Bloomberg TV that inventory levels are down 22% from a year ago.
Don’t get me wrong, there are still large concerns. For one, pricing still looks dubious for the rest of 2012. That’s partly because markets tend to move sideways in an election year while participants wait for the smoke to clear. We’ll get a better read next Tuesday, when the Case-Shiller pricing data (which tracks single-family home sales, but not apartments) is released.
For another, there’s always the possiblity that the sales that took place in the winter did represent the spring demand, and so we have to pay for a good February with a slow March.
But all in all, this represents a trickle of positive data. The phrase “green shoots” got discredited early in the recession, but I have to say, this look like a crocus coming to life after a long dormant time.