Five years after the financial crisis, investors are welcoming recovery in the housing market. Several data points that have come out over the last six weeks or so indicate that housing is doing well with inventory falling, home prices rising and mortgage applications increasing. This morning's S&P/Case-Shiller data shows that October home prices increased 4.3% year-over-year, beating expectations of 4.0%. That's the best improvement since May of 2010.
We've highlighted some data points over last two weeks from the housing sector:
* HOUSEHOLD FORMATION REMAINS STRONG IN NOVEMBER (note 12/20)
* Inventory of existing homes for sale sank 3.8% month-over-month to 2.03 million units, down from 2.14 million units in October. (note 12/20)
* The rate of existing home sales in November was stronger than expected at 5.04 million (SAAR) vs. consensus expectations for 4.9 million and was up 5.9% month-over-month vs. October. (note 12/20)
* Builder confidence rose further in December, as this morning's NAHB HMI reading was 47, up 2 points MoM from a revised composite reading of 45 in November. (note 12/18)
* The MBA Mortgage Purchase Applications Index rose 1.0% last week. This is the fifth consecutive week of positive WoW growth. (note 12/12)
Hedgeye Financials Sector Head Josh Steiner breaks down this morning's Case-Shiller data in detail:
"Looking at the data on a city-by-city basis, Phoenix and Las Vegas showed the strongest month-over-month improvement, rising 1.4% and 2.8%, respectively. Meanwhile, Boston and Chicago were the laggards. On a year-over-year basis, Phoenix is blowing the rest of the country away, up +21.7% YoY, followed by Detroit +10.0% YoY. Clearly the distressed market has turned from headwind to tailwind. The weakest two markets nationally on a YoY basis are New York and Chicago, both down just over 1%.
It's also worth noting that New York has an enormous weighting in Case-Shiller. New York accounts for 19.4% of the index. Considering NYC is the worst performing market in the country, and accounts for one-fifth of the index, it's a testament to how strong the real estate market throughout the rest of the country is."