The Wood and Fiber Supply Chain Experts
Housing Market Update
From the August 2009 Forest2Mill newsletter.
Housing inventories dropped for both existing and new homes in June,
and housing starts increased. Though prices still lack stability, it appears we may finally have
found the bottom of the housing market. The way up is unlikely to be swift or dramatic, but a
tentative start has begun.
Seasonality is one of the reasons for the improvement, as sales in June are generally higher
than May. However, affordability, tax credits and ample available supply are also driving the
market.
Table 1: Housing Statistics at a Glance, January through June
2009
1Source: National Association of Realtors
2Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development
r=Revised
p=Preliminary
In June, existing home sales increased by 3.6 percent over May and
were off just 0.2 percent from June 2008 (see Table 1). This increase marked the third month in a
row that existing home sales improved. Lawrence Yun, the National Association of Realtor’s chief
economist said this about the number: “The increase in existing-home sales occurred in all major
regions of the country. We expect a gradual uptrend in sales to continue due to tax credit
incentives and historically high affordability conditions.” The existing home inventory level
dropped to 9.4 months of supply, which is down 0.7 percent from a 9.8-month supply in May.
New home sales saw dramatic improvement in June (see Table 1), increasing 11 percent over
May’s level. This represents three straight months of upward movement, and the fourth increase in
the last six months. Not only was the sales pace strongest since November 2008, sales numbers
significantly exceeded economists’ expectations. Thompson Reuters reported they expected a pace of
360,000 new home sales, and Dow Jones Newswires reported economists expected a rise of 2.3 percent
to 350,000. The median new home price, however, dropped dramatically, down to $206,200 from May’s
$219,000.
While prices are far from stable, the Case-Shiller Home Price Index
noted for the first time that home prices increased just under 0.5 percent in May. Prices continued
to drop in only 5 of the 20 cities tracked by the index: Las Vegas, Phoenix, Miami, Seattle and Los
Angeles. Prices rose in 13 of the 20 cities.
New residential construction also improved (see Table 2). Building permits increased to
563,000 in June, an 8.7 percent increase over May; single family permits rose 5.9 percent. Housing
starts rose 3.6 percent to 582,000, with single family starts rising 14.4 percent to 470,000.
Completions were off slightly in June, but single family housing completions rose 8.9 percent to
538,000.
Table 2: New Residential Construction, January through June 2009
Source: U.S. Census Bureau and U.S. Department of Housing and Urban
Development
r=Revised
p=Preliminary