Is The Housing Market Actually Recovering?

Everyone wants to know if the housing market is truly showing signs of a recovery. There are

conflicting headlines every day. One day, we hear sales are up. The next day it is reported

that prices are down. Is the real estate market coming back? The answer is ‘yes’ and ‘no’.


There are two aspects that must be evaluated: house sales and house prices. They will not

recover at the same time. Sales are already increasing rather nicely while prices will still

soften in many markets through 2012.


Home Sales

The National Association of Realtors (NAR) issues a Pending Home Sales Report each month.

Sales have been increasing nicely over the last twelve months nationwide.  I have personally been in touch with Realtors

across the country who are reporting that activity has increased compared to last year. The sales

side of the recovery is starting to show great promise.


Home Prices

Many price indexes have shown that national home prices are continuing to stumble. Even

with demand increasing, we must look at where the supply of housing stock stands. Though

‘visible’ inventory (homes currently on the market) is shrinking, there is still a large overhang

of ‘shadow’ inventory (foreclosures about to come to market as a result of the National

Mortgage Settlement). This increase in inventory will outpace the increase in demand and

thereby cause prices to continue to soften in many parts of the nation.


Housing is coming back!  However, sales will come back before prices.

We will not see prices appreciate until we work through the oversupply of homes on the market.