Economic indicators continue to provide evidence that the worst of the housing market downturn may be over, but the road to recovery will be long.
Housing Starts
The latest government-issued housing data indicates that the key single-family home production sector “is gradually finding more stable ground,” particularly in light of ongoing credit issues and poor weather conditions, David Crowe, chief economist for the National Association of Home Builders reported last month.
Sounding an optimistic note, Crowe said that the very thin inventory of new homes currently on the market, coupled with the pent-up demand from three-plus years of low household formations (primarily among echo-boomers) and excellent affordability conditions “will likely provide the platform” for a 25% gain in new-home construction and a 20% gain in new-home sales this year over 2009.
While the combined pace of single- and multi-family housing starts declined in the most recent numbers, the decline was mostly due to a precipitous dip in multi-family starts, according to the Washington, DC-based NAHB. In contrast, single-family starts were virtually even with last year’s numbers, the trade association added.
Existing-Home Sales
Although sales of existing homes have been higher than year-ago levels for eight straight months, and home prices are considered far more stable compared to the past few years, the housing recovery is nevertheless “fragile at the moment,” according to the chief economist for the National Association of Realtors (NAR).
According to Lawrence Yun, chief economist for the Washington, DC-based NAR, “the key test for a durable recovery” will actually be evidenced once the numbers are counted for resales resulting in part from the April 30 tax-credit deadline, a particular incentive for first-time buyers