Is the housing market finally turning around?
Yesterday the Commerce Department reported that new home sales rose 11 percent to an adjusted annual rate of 384 thousand units per year. With prices still falling, sales have now risen for three months in a row to their highest level since November.
Now, November was no great shakes. But now the data is headed up, not down like before. And while national new home sales don’t even add up to half of the total foreclosure activity in California, it’s striking that anyone is buying a new home at all with all the foreclosed homes on the market. Remember, new home sales are a leading indicator; foreclosure activity is a lagging indicator.
And housing activity precedes increases in home prices. So what do we see? Another link in a long chain of indicators that show that the economy is beginning to turn up. Not dramatically, and not without some bumps. But the direction is upwards.
And that, my friends, is encouraging.
Douglas R. Tengdin, CFA
Chief Investment Officer
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