During a presentation today, National Association of Home Builders’ (NAHB) chief economist, David Crowe, PhD., said he felt the housing market was recovering, although it was a “fragile” recovery and cautioned that it could be “affected both directions by the recent election results”. As you have heard me talk about so much, Crowe reminded us that real estate is very local and said that he felt there has been “no consistent national trend for some time” as the recovery has been from “relatively small and disparate” locations for about a year now. He did go on to say though that there are now enough locations experiencing a recovery that it is now showing in the national numbers.
One of the things Crowe reviewed was the relationship between house prices and income, looking at the historical trend, where things went during the peak and where we are now. On a national level, the relationship between home prices and income peaked at 150 percent above the historical norm but had now returned to the “norm”. In Missouri, the home price/income ratio peaked at a little over 130 percent and is now back down to the historical normal as well.
Positive Signs for the Housing Industry:
House Prices and Income – Peak and Current:
Home price trend showing steady increase
Ratio of Home Prices to Income back on track with historical norm after 150 percent increase during bubble
Household formations in the U.S. are on the rise…will lead to increased demand for new homes
New home sales have increased and are expecting to grow rapidly in next 2 years