Housing: Bottom, Reversal or Just Noisy Numbers


The spring housing numbers aren’t coming in along expectations.

That can’t be, right?

Unemployment has been easing, mortgage delinquencies falling, and affordability is off the charts. That means housing should be bouncing back with verve and vigor this Spring, except it’s not.

It’s not crashing again, it’s just bouncing along a bottom, which means the recovery, as we’ve been warning all along, becomes increasingly local.

Let’s look at some data out this week:

Sales of new homes dropped, but only after a large upward revision in February. That of course leads everyone to blame the weather.

S&P/Case-Shiller’s home price index reached new lows, but the amount of the annual drop was smaller than the previous month, so that’s an improvement, sort of.

Mortgage applications fell, even as the rate on the thirty year fixed hit a new low on the Mortgage Bankers Association’s weekly survey. Refis fell hard and purchase applications rose a little, although the four week moving average is down.

Zillow.com reports that home values rose from February to March (0.5 percent), “marking the largest monthly increase since May 2006, before home values peaked. That led analysts there to exclaim the headline: “Majority of Markets Covered by Zillow Home Value Forecast to Hit Bottom by Late 2012”

Trulia.com released a report which mixes three indicators, construction starts, existing home sales and delinquency and foreclosure rates in order to gauge the housing recovery. Apparently it slipped backward in March “after a few strides forward.”

Then Federal Reserve Chairman Ben Bernanke said, “The ongoing weakness in the housing market still represents a headwind to economic recovery.”

No wonder economists at Freddie Mac concluded in its April forecast that the data are, “noisy.” Then they too blamed it all on the weather.

So what are we to think, and how are we to play housing, here at the almost, sort of, bottom in some markets but not in others?

“Investor demand will drive many markets this spring and summer,” says David Stiff, chief economist at Fiserv. “This means that, at the moment, the MBA purchase application index is a less reliable predictor of sales activity.”

Stiff says he thinks the housing market has bottomed out, but that won’t be obvious until next year. He also makes clear that the recovery will be driven by investors, and investors largely buy in the lower cost markets.

The one truth I heard in all the heated talk of housing today came from CNBC’s Jim Cramer, with whom I often disagree. He said, “aggregate numbers make you no money.” He was talking specifically about housing

Questions? Comments? RealtyCheck@cnbc.comAnd follow me on Twitter @Diana_Olick