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Weekly Market Insight
First In, First Out
 August 27, 2012

The housing market got us into this mess – the Great Recession and the sluggish recovery – and now it is in a position to help pull us out. Both new and existing home sales rose in July, up by 3.6% and 2.3%, respectively, on a seasonally adjusted basis. Compared with a year ago, new home sales have risen by a robust 25.3% while sales of existing homes increased by 11.4%. The supply of existing homes is a reasonable 6.4 months while the supply of new homes is tight at 4.6 months. Pricing remains weak, however, with new homes selling in July for 2.4% less than July of 2011. Existing home prices are 11.4% higher than a year ago, but much of that gain is due to the slowdown in foreclosures and distressed sales over that period as lenders held off until the robo-signing agreement was settled. Expect existing home prices to level off as lenders restart foreclosure sales. Residential investment expanded at an annualized rate of 9.7% in the second quarter compared with 1.5% for the overall economy, and it should continue to pull GDP forward in the quarters ahead as construction gradually picks up.

Need more information? Contact:

Robert Bach
National Director, Market Analytics
312.698.6754