This month, we have seen a cluster of indicators which taken individually may not suggest that something is stirring in the housing market. Taken as a whole, they may be be a signal of some life in the housing market. These indicators are all national, but even the regional breakdowns are on the uptick.
First, the National Association of Realtors' Pending Home Sales Index unexpectedly jumped 7.4 in August according to a report on msnbc.com. This is meaningful because it is a leading indicator which gives us a hint of what may be in the future. Of course, we don't know how many of those contracts will fail - some always do - but for the moment, this indicator is telling us that sales activity in the future is likely to rise.
Second, sales of previously owned homes rose 5.5% last month " the biggest gain since 2003, and the inventory of unsold homes fell, a hopeful sign for a housing market mired in a long slump" according to Reuters this week. Total sales transactions doesn't tell us much about where prices are, or even much about the quality of the housing stock. However, it speaks to the fact that more people were at the closing table than the month before, which again is good news.
Third,Realty Trac reported that foreclosures nationally had fallen by a solid 12% in September compared with August. California, where a new law (SB 1137) requires lenders to make contact with a borrower at least 30 days before filing a Notice of Default, led the way with a 51% drop from the previous month.
Finally, new home sales rose unexpected, probably as a result of continuing price cuts by builders.
``Builders are seeing the light,'' Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, said in a Bloomberg Television interview. ``They are cutting prices more aggressively. They're very nervous about all the foreclosures.''
I don't pretend to know where all this is leading. There will probably be other shoes s drop relative to the economy (think credit cards, bank consolidations, the election). But in the 24 hour news cycle, scary headlines seem to trump everything else. Good news is sometimes boring, I guess.
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