It won't necessarily be a smooth or even recovery (if such thing exists) but industry watchers say the long-awaited housing recovery may finally be underway. Rick Sharga, executive vice president at Carrington Mortgage Holdings, tells The Daily Ticker that he believes the housing recovery is sustainable.
The data Thursday showed improvement in the housing market. The National Association of Realtors' pending home sales index jumped 5.2% to 104.8 in October, a four year high. It's the 18th straight monthly increase for the forward-looking indicator.
The trends varied by region with the Northeast seeing some impact from Superstorm Sandy.
"Contract activity surged in the Midwest and is showing very healthy gains in the South, but was down slightly in both the Northeast and West," said NAR chief economist Lawrence Yun in a press release. Still, all regions were up from a year earlier. All regions posted double-digit returns except for the West.
"We've had very good housing affordability conditions for quite some time, but we're seeing more impact now from steady job creation, and rising consumer confidence about home buying now that home prices have clearly turned positive," said Yun.
Thursday's housing report followed less positive data on Wednesday. The Commerce Department said sales of new homes fell 0.3% in October and September's figures were revised sharply lower.
But yet another report, the Federal Reserve's regional look at economic activity that was released late Wednesday, indicated that markets for single-family homes have continued to improve across most regions, with the exception of Boston and Philadelphia. Data earlier in the week showed gains in two home price indices -- the S&P/Case- Shiller Home Price Index and the FHFA Housing Price Index.
"We have to contain our enthusiasm a little bit," says Sharga in the attached clip. "This is not an explosive recovery. "It's a gradual, grind-it-out recovery."
He expects relatively flat sales numbers for the next year and marginal growth in terms of prices.
The recovery in the housing market has been accelerated by investor activity and an influx of offshore money, says Sharga. But there's still a 3-year inventory of available homes that the market needs to address. Banks have repossessed about 500,000 properties and there are another three million that are seriously delinquent and have yet to enter foreclosure, according to Sharga. The biggest headwind for the housing market is the inability of the average consumer to get a loan, he notes.