Home Sales Measures Coming – More Good News?

Monday, December 21, 2009

House rainbowSome interesting indicators are being released the last two weeks of December – our period of special opportunity. Housing has the big three: existing home sales, new home sales and S&P Case-Shiller home prices. All have been improving in spite of negative articles about the current housing market and its outlook.

Here is where things stand…

Home sales and prices have risen from the low levels reached at the beginning of the year. The consensus November sales expectations are for moderate gains, continuing the trend.

In spite of the improvements, there is continued media attention to negative home news. For example, house foreclosures, mortgage delinquencies, homes “under water” (value is less than mortgage) and the ominous sounding “shadow inventory” – homes that will be sold, but are currently not listed. (This last item is hardly novel or scary. Home owners often try to time their sales to when buyers are prevalent. Banks holding foreclosed homes are no different.)

Positive indicator readings can provide mounting evidence that the media’s pessimistic outlook is off base. The perception of housing is important beyond the home-building industry. Because housing is viewed as the initial source of our problems, its outlook colors expectations for the overall economy and stock market.

Here are the coming reports along with historical graphs:

Existing Home Sales (National Association of Realtors)

  • Release scheduled: Tuesday, 12/22 at 10 AM EST
  • Period measured: November
  • Consensus: 6.25 million (seasonally adjusted at annualized rate)

Home sales-existing

New Home Sales (Census Bureau)

  • Release scheduled: Wednesday, 12/23 at 10 AM EST
  • Period measured: November
  • Consensus: 440 thousand (seasonally adjusted at annualized rate)

Home sales-new

S&P Case-Shiller Home Price Index (Standard & Poor’s)

  • Release scheduled: Tuesday, 12/29 at 9 AM EST
  • Period measured: October
  • Consensus: n/a

Home prices-Case-Shiller

S&P Case Shiller’s index is a good measure because it tracks actual price changes for the same properties in 20 metropolitan areas. (Note that this index is one month behind the sales figures.) Other price measures report average or median prices that are affected by the composition of sales. For example, fewer high-priced house sales implies prices have dropped, and vice versa.

* * *

So, watch the indicators for continued improvement. Good numbers will bolster the notion that we are in a good stock investment environment – one of promising growth prospects and attractive valuations.

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