Tuesday, May 08, 2018

Four Years Ago: Housing Doom and Gloom

by Calculated Risk on 5/08/2018 06:35:00 PM

• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, The Producer Price Index for April from the BLS. The consensus is a 0.3% increase in PPI, and a 0.2% increase in core PPI.

Four years ago, there were numerous "doom and gloom" stories about housing. I responded with What's Right with Housing? written on May 6, 2014. I wrote:

The first mistake these writers make is they are asking the wrong question. Of course housing is lagging the recovery because of the residual effects of the housing bust and financial crisis (this lag was predicted on this blog and elsewhere for years - it should not be a surprise).

The correct question is: What's right with housing? And there is plenty.
Housing is a slow moving market - and the recovery will not be smooth or fast with all the residual problems. But overall housing is clearly improving and the outlook remains positive for the next few years.
What has happened since?

Housing starts are up 32% from March 2014 to March 2018.

New home sales are up 69% from March 2014 to March 2018.

Existing home sales are up 20%.

House prices are up 22% (Case-Shiller National Index February 2014 to February 2018).

When I started this blog in 2005, I was very bearish on example.  (For example, see: Housing: Speculation is the Key written in April 2005)

Some day I'll be bearish again on housing, but not now.  Clearly those bearish on housing in 2014 were wrong.