Construction workers build single family homes in San Diego, Calif., on March 25, 2013. A top Federal Reserve official said on Oct. 17, 2013, that he is seeing signs of the United States re-entering a “housing bubble.”MIKE BLAKE/Reuters
Bill McBride at Calculated Risk is one of the top voices to listen to on U.S. housing – and he is staying bullish on the housing recovery, despite some recent setbacks that have challenged that belief.
We've learned that existing home sales in September fell, prices have been rising at a slower pace and borrowing costs are going up, none of which would seem to bode well. But Mr. McBride sees things differently: "What matters for jobs and economy are new home sales, not existing home sales," he said on his blog.
Apart from the decline in existing home sales in September, he believes that the big story within the release on Monday was the uptick in year-over-year inventories – which he expects to continue, weighing on price increases. But when he looks closely at the release, he sees something quite encouraging: Distressed sales in September represented just 14 per cent of overall sales, down from 24 per cent in 2012 – suggesting that the heavy weight of disclosures continues to fade.
"Although this survey isn't perfect, if total sales were up 10.7 per cent from September 2012, and distressed sales declined to 14 per cent of total sales...this suggests conventional sales were up sharply year-over-year – a good sign," he said.
David Berman