RE/MAX Preferred: Housing Market Recovery Hits New High in September

Jed Kolko, Trulia Chief Economist

Trulia’s Chief Economist reveals the latest findings from the Trulia Housing Barometer. Looking at new construction starts, existing home sales and the foreclosure plus delinquency rate, the housing market is now 43% back to normal — a new post-crisis high!

Each month Trulia’s Housing Barometer charts how quickly the housing market is moving back to “normal.” We summarize three key housing market indicators: construction starts, existing home sales and the delinquency-plus-foreclosure rate. For each indicator, we compare this month’s data to (1) how bad the numbers got at their worst and (2) their pre-bubble “normal” levels.

Each month Trulia’s Housing Barometer charts how quickly the housing market is moving back to “normal.” We summarize three key housing market indicators: construction starts (Census), existing home sales (NAR) and the delinquency-plus-foreclosure rate (LPS First Look). For each indicator, we compare this month’s data to (1) how bad the numbers got at their worst and (2) their pre-bubble “normal” levels.

In September 2012, construction starts surged. However, existing home sales fell slightly, and the delinquency foreclosure rate unexpectedly jumped.

Construction starts held roughly steady. Starts in September were at an 872,000 annualized rate, up 15% month over month and up 35% year over year. Construction activity in September was at its highest level since July 2008. Nationally, construction starts are 39% of the way back to normal.

Existing home sales slipped a bit in September. After a big increase in August, existing home sales fell 1.7% month over month to 4.75 million in September – but that’s still a respectable 11% increase from one year ago. Sales are 57% back to normal, which is more than halfway.

The delinquency foreclosure rate jumped back up. In September, 11.27% of mortgages were delinquent or in foreclosure, up from 10.91% in August due to an unexpected increase in the share of delinquent loans. The combined delinquency foreclosure rate is at its highest level in seven months and is 34% back to normal.

Averaging these three back-to-normal percentages together, the housing market is now 43% of the way back to normal – compared with 42% in August and 24% in September 2011. For the second month in a row, the Housing Barometer is at a post-crisis high.