Monday, 26 March 2012

US housing recovery takes a break

The recovery of the housing market in the United States made little progress recently if last week's data are any indication.

The week started positively enough. Monday saw the National Association of Home Builders report that its NAHB/Wells Fargo Housing Market index held steady at 28 in March, unchanged from February's reading which was revised down from 29. The latest readings are the highest since June 2007.

Tuesday saw mixed data on housing starts from the Commerce Department. Starts fell 1.1 percent in February to an annual rate of 698,000 units. However, new building permits jumped 5.1 percent to an annual rate of 717,000, the highest since October 2008.

The dataflow turned more negative on Wednesday. The Mortgage Bankers Association reported that mortgage applications fell 7.4 percent in the previous week, with purchasing activity falling 1.0 percent. The National Association of Realtors reported that existing home sales fell 0.9 percent in February to an annual rate of 4.59 million.

Thursday's data were little better. The Federal Housing Finance Agency reported that home prices were unchanged in January from December on a seasonally-adjusted basis and were down 0.8 percent in January from a year earlier.

Finally, on Friday, the Commerce Department reported that new home sales fell 1.6 percent in February to an annual rate of 313,000. This was the second consecutive fall in new home sales and brought the sales rate down to the lowest since October.

The silver lining in the otherwise weak report on new home sales is that the supply of homes remained at a record low of 150,000 in February, unchanged from January. The falling supply of homes should help relieve downward pressure on home prices and eventually lead to more home building.

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