Carpe Diem

More signs of a housing recovery: Rising pending home sales and lumber prices

1. Strongly beating the consensus expectation of a weak 1% increase, pending home sales increased in October by a whopping 5.2% compared to September, and by 13.2% compared to last October, bringing the Pending Home Sales Index (PHSI) to its highest level since March 2007.  By region, the strongest gains in the PHSI for October were in the Midwest (+20%) and the South (+17.4%). 

2.  Framing lumber prices increased last week to $355 per 1,000 board feet, which represents an annual gain of 35%, and brings lumber prices to their highest level in more than six years, except for a brief period in April 2010 when prices spiked above $360 for a few weeks.

6 thoughts on “More signs of a housing recovery: Rising pending home sales and lumber prices

  1. How does Radar Logic come up with their monthly housing report?

    “Radar Logic is a technology-driven data and analytics business that produces a daily “spot” price for residential real estate in major U.S. metropolitan areas.

    Data are captured from public sources and translated into the Radar Logic Daily™ Prices for 25 U.S. Metropolitan Statistical Areas (MSAs), the Manhattan condo market, and a 25-MSA composite.”

    Radar Logic states these are “spot prices”. The sample size does not seem to be big enough but I don’t have much of a grasp for stats.

    (Anybody know the name of the group that sang Radar Love?…

    OK, Golden Earring.)

  2. From what I can tell the market is dependent on continued cheap credit and FHA largesse, not to mention a willingness for financial institutions to keep homes off the market. That is not a sign of a healthy market but of a nice bounce after a severe decline. As Taleb would argue, the system is fragile. That means that it cannot continue as is for very long.

  3. Hmmm, not really sure just how valid this study is yet but none the less its another interesting take on the housing situtation: Panel Paper: The Asset Price Meltdown and the Wealth of the Middle Class

    The paper focuses mainly on how the middle class fared in terms of wealth over the years 2007 to 2010 during one of the sharpest declines in stock and real estate prices. The debt of the middle class exploded from 1983 to 2007, already creating a very fragile middle class in the U.S. The main interest here is whether their position deteriorated even more over the “Great Recession.” The paper also investigates trends in wealth inequality from 2007 to 2010, changes in the racial wealth gap and wealth differences by age and marital status, and trends in homeownership rates, stock ownership, retirement accounts, and mortgage debt…

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