The Wood and Fiber Supply Chain Experts
Housing Market Update
From the December 2009 Forest2Mill newsletter.
Sales of existing homes increased to 6.1 million units in October, up
10.1 percent from September and 23.5 percent from October of 2008 (Table1). Even Lawrence Yun, the
National Association of Realtors’ chief economist, was surprised by the gain. Yun credits the
$8,000 tax credit (which was supposed to expire in November but has since been extended to the end
of April 2010 and expanded) and low interest rates (down from 5.06 percent in September to 4.95
percent in October for 30-year fixed mortgages, the third lowest rate since 1971).
The median price for existing homes continued to decline, falling 7.1 percent from October
2008 to $173,100. Months of inventory fell in October from 8 months to 7 months, a 3.7 percent
improvement. Compared to this month last year, inventory has improved by 14.9 percent. Lawrence
Yun, chief economist for the NAR said, “The current housing supply is now at the lowest level in
over two and a half years. We’re getting closer to a general balance between buyers and sellers.”
Yun believes we should “reach self-sustaining housing conditions and firming home prices in most
areas around the middle of 2010.”
Sales of new homes also increased in October, up 6.2 percent from September to October to
430,000. Inventory levels improved, dropping from 7.4 months to 6.7 months, a 39.6 percent
improvement over October 2008. The median price for new homes increased in October by just
over one percent; it now stands at $212,200.
Table 1: Housing Statistics at a Glance, January through October 2009
1Source: National Association of Realtors, existing home sales data is seasonally
adjusted
2Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development
r=Revised
p=Preliminary
The Case-Shiller index also indicates that home prices continued on
an upward trend. The index increased 3.1 percent in 3Q2009. While this number is down 8.9 percent
from the same quarter last year, it is significantly better than the 14.7 percent decline that
occurred between the first quarter of the year and the second. Nationally, home prices have
returned to their 3Q2003 level.
The Pending Home Sales Index increased 3.7 percent; it is 31.8 percent above its October
2008 level. This is the largest annual increase ever recorded for the index.
Perhaps because the tax credit for new home buyers was set to expire, housing permits and
starts both lost ground in October. Housing starts fell 10.6 percent in October, 24.3 percent below
the October 2008 level. Permits were down 4.0 percent from September. Completions increased 1.9
percent (Table 2).
Table 2: New Residential Construction, January through October 2009
Source: U.S. Census Bureau and U.S. Department of Housing and Urban
Development
r=Revised
p=Preliminary