3 Numbers That Point to a Housing Recovery


NEW YORK (MainStreet) -- There’s been an avalanche of economic data pouring in the past week that provides more clarity about the U.S. housing market, which seems to be improving somewhat as 2012 beckons. Here are some of the key stats:

Foreclosures down since 2010. On Thursday, Lender Processing Services released its monthly look at the U.S. foreclosure landscape, and that look reveals a healthier market, at least on a year-to-year basis. LPS says foreclosures are now down 30% from their January 2010 peak, but adds that that could be just a lull in the action. It notes that “foreclosures in process” are still high, with foreclosures comprising 4.29% of all U.S. mortgages.

Unemployment down – with a caveat. The U.S. housing market depends heavily on the employment market. When unemployment is low, more money is flowing through the economy and consumers are more likely to buy and renovate their homes. Conversely, when the jobless rate is high, consumers grow anxious and put off any big housing decisions, and lenders are more inclined to snap their purses shut until the sun comes out again. This month’s number, released this morning by the U.S. Labor Department, showed the U.S. unemployment rate officially falling to 8.6%, as the private sector added 120,000 jobs to the U.S. economy.

But the federal government has a unique way of accounting for jobs. For example, this month 315,000 American adults stopped looking for work. But according to Uncle Sam, that‘s “good news” for the employment rate, which declines as a result of all those people leaving the workforce. But for consumers, the only number that matters is 8.6% – that should propel further spending for the holidays (as Americans see the economy as improving) and could give the housing market a shot in the arm, but probably only if December 2011 and January 2012 job numbers fall in line with the number that the Labor Department released today.

Federal Reserve provides a mixed message for housing. On Wednesday, the Federal Reserve came out with its Beige Book, which measures economic processes in the U.S. from early October to mid-November.

First, the Beige report characterizes the real estate market as “sluggish,” but does note that, thanks to continuing low mortgage rates, refinancing activity is growing at a rapid pace (the average 30-year fixed-rate home mortgage sits at 4.16%, according to the BankingMyWay Weekly Mortgage Rate tracker – still a low rate in historical terms).

The Fed sums up the recent housing market like this:

“Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace. Changes in credit standards and credit quality varied across Districts. Residential real estate activity generally remained sluggish, and commercial real estate activity remained lackluster across most of the nation. Single family home construction was weak and commercial construction was slow.”

There is some good news regionally, though: Residential real estate markets are up or stable in 10 of the 12 urban markets the Beige Book covers. Only Atlanta and St. Louis showed “decreased” real estate sales, while Philadelphia, Richmond, Va., Minneapolis, Kansas City, and Dallas all reported higher property sales.

Going forward, the data should take a backseat as Christmas and the New Year grow closer. For the time being though, a quick tabulation of this week’s pluses and minuses shows that the economy is getting a bit healthier, and the housing market – for now, at least – appears to be following suit.

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