Freddie Mac Chief Economist Frank Nothaft is predicting a reawakening, of sorts, for the housing market in his March 2012 Economic Outlook in a fashion that could read like a sequel to “Sleeping Beauty.”
Analyzing economic growth, construction data and a number of housing indicators, Nothaft is reporting a gradual, if slow, recovery for the housing market.
“[T]he housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” Nothaft said. “As if awakening from hibernation, housing starts and home sales moved to higher … levels of activity. Housing starts averaged nearly 700,000 on a seasonally adjusted annual rate (SAAR) over the November through February period, up 19 percent from the pace over the prior 12 months.”
A big chunk of new construction (nearly 50 percent) in 2012 has been for rental apartments and multifamily units, and Nothaft said that if the current rate of multifamily construction continues, it will be at its highest yearly level since 2005. He did stress, though, that construction will still be historically low to allow for the absorption of existing vacant properties into the marketplace.
Nothaft noted that median sales price increased 0.3 percent in February, the strongest sign of price stabilization in some time that correlates with some of the lowest interest rates in the history of Freddie Mac’s record keeping.
Even professionals are getting in on the optimistic wave. NAR’s Realtor Confidence Index, which measures the six-month outlook of its members, is now at its highest level since the index was launched in 2008.
The report also mentioned the recent improvements in the labor market, which have no doubt contributed to the strengthening housing market. Net job creation was more than 200,000 in February for the third straight month, and since December, 737,000 payroll jobs have been created and unemployment has fallen to 8.3 percent, the lowest in three years. Labor force participation also increased in February, and according to The Conference Board’s Consumer Confidence Survey, the share of people who felt that jobs were more plentiful rose to the highest level since September 2008.
All in all, Nothaft said the time seems right for a housing rebirth – and he was just as figurative in his language as before.
“A variety of encouraging indicators suggest that the housing market may be feeling a nascent awakening – much like the garden flora reemerging from their winter dormancy – and more neighborhoods may see stabilization in overall demand and housing values this spring.”