The Wood and Fiber Supply Chain Experts
Housing Market Update
From the March 2010 Forest2Mill newsletter.
The real estate market showed new signs of weakness in January, a
result of the temporary interruption of the homebuyer tax credit, weather in many parts of the
country that was not conducive to house hunting and the continuous stream of foreclosures.
Sales of existing homes fell to 5.05 million units in January, down 7.2 percent from
December (see Table 1), though still 11.5 percent above January 2009 levels. Months of inventory
rose in January, up from 7.2 months to 7.8 months. This is 8.3 percent higher than December, but
still an improvement of 18.8 percent from January 2009.
Sales of new homes declined in January as well, down 11.2 percent from 348,000 in December
to 309,000.
This is a record low. Inventory lost ground as well. January’s inventory jumped 13.8
percent to 9.1 months. While disappointing, this figure is still 26.6 percent better than
January 2009’s number.
Home prices showed renewed signs of weakness in January. The median price for existing homes fell to $164,700, down $5,800 from the previous month. This price is equivalent to the median price in January 2009. The median price for new homes also fell in January, down from $215,600 in December to $203,500.
The S&P Case-Schiller home-price index showed prices remaining
fairly stable in December. Half of the stories on the announcement noted that home prices rose
(0.3 percent on a seasonally adjusted basis) and the half noted the market fell (0.2 percent on a
not-seasonally adjusted basis).
Housing starts increased in December, but permits and completions both fell (see Table 2).
Housing permits decreased from 653,000 in December to 621,000 in January, a 4.9 percent decrease.
Year over year, permits are up 16.9 percent.
Housing starts improved from 575,000 in December to 591,000 in January, an increase of 2.8
percent. This represents an increase of 21.1 percent over the January 2009 level. Completions
decreased 12.4 percent in January, moving from 752,000 in December to 659,000. This represents a
15.3 percent year-over year decline from January 2009.
The Mortgage Bankers Association’s Weekly Mortgage Applications
Survey for the week ending February 19 showed that mortgage loan application volume decreased 8.5
percent from the previous week, and cited the 30-fixed mortgage rate at 5.03 percent. According to
Freddie Mac’s Primary Mortgage Market Survey, 30-year fixed interest rates have been hovering
around the 5 percent mark consistently over the last two months, with an average of 5.01 percent.
Bankrate quoted the overnight average for 30-year fixed mortgages on February 25 at 5.12 percent.
We expect February’s housing numbers to be disappointing as well, in part because of winter
weather throughout the Northeast in February. March and April should show upticks, however, as the
home buyer tax credits expire at the end of April and buyers will be anxious to take advantage of
the credits before they expire.