Exceedingly weak for the past year, the housing recovery seems to be gaining a little momentum.

Reflecting an improvement in builder sentiment on single-family homes, October’s NAHB/Wells Fargo Housing Market Index (HMI) rose four points to 18. While still low, this was the HMI’s highest level since the home buyer tax credit expired in May 2010.

While still remaining close to historic lows, new-home sales rose 5.7% in September, a hint of likely further improvement in 2012.

September’s housing starts were also encouraging, jumping 15% to their highest level since April 2010. The increase came mostly from the volatile multifamily sector, so it may not be sustainable. And multifamily starts remain far below the levels that will be needed to meet the rising demand for rental housing, which can be seen in the steady rise in nominal rents in the consumer price index in recent months.

House prices continued to recover modestly in the Case-Shiller composite indexes for August,  although at a more moderate pace than in the preceding four months, unlike prices on the index from the Federal Housing Finance Agency (FHFA), which stumbled slightly after a four-month climb.

Existing home sales experienced some slippage in September following a solid gain in August, maintaining the relative flat trend that has persisted since the beginning of 2011.

Economic conditions are expected to remain weak, slowing the housing recovery but not derailing it. At its Sept. 20-21 meeting, the Federal Open Market Committee (FOMC) projected slower growth for the second half of 2011 and into 2012, based on weakening labor market conditions and consumer and business sentiment. The Oct. 19 Beige Book from the Federal Reserve depicted a slow and uneven economic recovery, with most bank districts reporting either weaker or less certain business outlooks.

On the housing policy front, leaders in Washington appear to be turning some attention to the depressed state of the nation’s housing market, which has gone largely unaddressed.

The FHFA recently announced changes to HARP (Housing Affordability Refinance Program) to enable more underwater home owners to refinance their mortgages at today’s historically low interest rates.

The Federal Reserve is also expanding its programs, deciding to reinvest principle payments from agency debt and mortgage-backed securities back into mortgage-backed securities rather than longer term Treasuries.

Supporting even stronger measures, Fed Governor Daniel Tarullo recently advocated further large-scale purchases of mortgage-backed securities, but the FOMC remains divided on this issue.

Latest Posts

• September New Home Sales Improve
  New-home sales remained near their record low after increasing 5.7% in September, with further improvement expected to materialize in 2012. Posted: Oct. 26
  
  
• Census Data Reveal Geography of Rent-Burdened Families
  NAHB research finds that rent-burdened households — those paying more than 30% of their income on rent — are disproportionately found in states that are farthest away from recovering from the recession. Posted Oct. 25
  
  
• Mixed Result for House Prices in August
  Growth in house prices moderated in August over the preceding four months, with a modest increase in the Case-Shiller house price index offset by a slight decline in the index of the Federal Housing Finance Agency. Posted: Oct. 25
  
  
• Federal Reserve Governor Tarullo on Housing and Jobs
  During a recent speech, Federal Reserve Governor Daniel Tarullo advocated further large-scale purchases of mortgage-backed securities to provide more support for mortgage lending and housing markets. Posted: Oct. 21
  
  
• Existing Home Sales Turn Back Down in September
  Existing homes sales turned down again in September, falling 3.0% to an annual pace of 4.91 million. Sales have remained around 5 million units since the beginning of the year. Posted: Oct 20
  
  
• Beige Book: Modest Growth Continues, But Outlook Remains Cloudy
  Business conditions continue to improve across the nation’s 12 Federal Reserve Districts, but the pace of recovery remains slow and uneven. Posted Oct. 20
  
  
• Multifamily Starts Up in September
  The August drop in multifamily production was more than reversed, with starts in buildings with five or more apartments up 53% in September. Posted Oct. 20
  
  
• Real Residential Rents Remain Flat…But The CPI Continues to March Upward
  The Consumer Price Index continued upward in September, led by rising energy and food prices. While up nominally, the index of primary residence rents slipped slightly in September in real terms. Posted Oct. 19
  
  
• Improving Markets Index: Iowa City, Iowa
  Benefiting from the presence of the University of Iowa, healthcare and its diversified economy, Iowa City, Iowa, was one of 23 markets appearing on the second monthly NAHB/First American Improving Markets Index. Posted: Oct. 19
  
  
• September Housing Starts Up
  September housing starts were up 15%, but the increase occurred almost entirely within the multifamily sector. Posted: Oct. 19
  
  
• Residential Building Material Prices Remain Unchanged in September, Despite an Energy-Driven Increase in the Producer Price Index
  Volatile energy prices continue to push up the producer price index (PPI), with gasoline increasing 4.2% in September and the overall PPI up 4.2%. Posted: Oct. 18
  
  
• Builder Sentiment Up Four Points
  The October NAHB/Wells Fargo Housing Market Index rose four points to 18, its highest level since the end of the home buyer credit in May 2010. Posted: Oct. 18
  
  
• Updated NAHB Research: House Price Estimator
  NAHB has updated the house price estimator model, enabling builders, developers, prospective home buyers and home owners to see the impact that various physical features and neighborhood characteristics might have on the price of a home. Posted: Oct. 17
  
  
• Federal Open Market Committee Minutes: More Detail From the September 20-21 Meeting
  The minutes of the Sept. 20-21 Federal Open Market Committee meeting reveal projections of slower growth in the second half of 2011 and next year, due to weaker labor market conditions and consumer and business sentiment. Posted: Oct. 17

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