As discussed in the prior article, the median price per square foot was up again last month, though not as strongly as earlier in the year:
The plain vanilla median, for what it’s worth, was mixed — down slightly for single family homes, up big for condos, and up slightly in aggregate:
The median-based proxy for the Case-Shiller index, being based on three months’ worth of movements, had a good head of steam going by August:
The prior article noted that if my little Case-Shiller forecast methodology is even close to correct, this will have been a far bigger spring rally than we saw any time in the last bust (or this one, for that matter).
Sales activity remained above last year’s levels, though not dramatically so:
And inventory was ever so slightly down:
Months of inventory notched up a bit but remained quite low:
The prevalence of "reverse shadow" contingent listings increased, implying that inventory is even tighter than the above graph suggests:
But another slug of foreclosures was added to the pile:
The foreclosure rate was down somewhat from recent months but still blows historical rates out of the water:
Pigg discussions have raged lately about what to make of all this. We know that spring rallies are typical, but this is an unusually large one that is accompanied by a notable lack of supply. On the other hand we’ve got shadow inventory, a weak economy, and the potential for rising rates. I’m not going to rehash all the recent comment threads here as they are long, intricate, and generally quite nuanced and good.
I will say that my own opinion is that people tend to underestimate the power of the printing press and of government stimulus. And by that I don’t mean the power to fix things in any kind of healthy or sustainable way, but rather the power to exert a huge influence on economic and market activity. Even if this is just a spring sucker rally, it will be an unusually large one. This suggests to me that the all-out government effort to prop up home prices is having an effect.
Now, will the effect last beyond this summer? I don’t know the answer to that and, as I’ve suggested before, I don’t think anyone else does either. The market imbalances and interferences are simply too massive and unprecedented for there to be a clear outcome. It seems that it is more a political question now than a market question.
I strongly suspect that REAL home prices will continue to decline in the coming years — which is to say that prices will decline when adjusted for the declining purchasing power of our currency. But what happens in nominal terms is a whole lot murkier to me.