David Blitzer: 3 reasons why housing is “somber”

Housing doesn't share in larger economy's good news

Despite the economy performing well in November and early December, the same can't be said for housing, according to David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in the company's home price report released Tuesday.

On the positive side, Blitzer noted that third quarter GDP was revised to 5% real growth at annual rates, and unemployment was at 5.8% as payrolls added over 300,000 jobs in November.

However, “Housing was somber,” he said.  

Specifically, he mentioned these three reports:

1. Housing starts     

Housing starts were down in November, printing at a seasonally adjusted annual rate of 1,028,000, just below analyst expectations, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 1.6% below the revised October estimate of 1,045,000 and is 7% below the November 2013 rate of 1,105,000.

2. Existing home sales

Existing home sales in November tumbled 6.1%, the biggest drop since July 2010, down to a seasonally adjusted annual rate of 4.93 million.

This was well below analyst expectations of a 1.1% decline, ending five months of 5 million SAAR sales.

3. New home sales

New home sales for November took a nose-dive on Tuesday, following on the heels of Monday’s existing home sales plummet of 6.1%, making for a very un-Merry Christmas for housing on the eve of Christmas Eve.

The new home report from HUD printed with an annual sales rate of 438,000, versus expectations for 460,000, down 1.6% for the month.

In the October S&P/Case-Shiller Home Price Indices released Tuesday, the S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, posted a slight decline, with a 4.6% annual gain in October 2014 versus 4.8% in September.

But Zillow Chief Economist Stan Humphries has hope for housing moving forward into next year.

Regarding the Case-Shiller announcement Tuesday, Humphries said, “Housing definitely came back to earth over the second half of 2014, and we welcome and expect to see more of the same as we look ahead at 2015. A slower-moving housing market is inherently more stable, more balanced between buyers and sellers and more sustainable over the long-term.”

“We’re ending 2014 on a good note, and this momentum will continue. As we prepare for New Years and the next home-shopping season, we expect soaring rents to entice more people to the relative stability of homeownership, particularly younger potential buyers. This surge in demand should be met by more inventory as more sellers look to realize recent gains in equity and more builders turn their attention to entry-level home construction,” Humphries said.

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