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The Housing Market Bottomed Two Years Ago–The Only Way Is Up, Says Economist

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Existing-home sales increased slightly less than expected in the month of January, up 4.3% to a seasonally adjusted annual rate of 4.57 million, and sales were up 0.7% compared to the same period a year earlier, according to the National Association of Realtors. This marks the third month in four that sales of existing single family homes, townhomes, condos and co-ops has increased. December home sales, originally seen up 5.0% month-over-month, were revised down to a 4.38 million unit pace, reflecting an 0.5% drop.

"These are good numbers and we've seen many housing numbers lately that have come out positive," says IHS U.S. economist Partick Newport, who believes good weather and positive economic momentum pushed sales higher.

Since the beginning of the year, there's been a lot of chatter over whether the U.S. housing market may have hit bottom. Analysts at Goldman Sachs, JPMorgan CEO Jamie Dimon and hedge fund manager Bill Ackman have all predicted a housing bottom could be just around the corner.

Professor Robert Shiller, however, disagrees due to the historical data that show when a bubble bursts it tends to overshoot on the downside just as it does on the upside. (See: Robert Shiller: A Housing Bottom? What Are They Thinking?)

Eclipsed by huge numbers of backlogged foreclosures and large amounts of shadow inventory, it is certainly hard to predict when any recovery could take hold. Distressed homes, which include foreclosures and short sales, accounted for 35% of January sales, up from 32% in December. Inventory for the month fell to 2.31 existing homes, a low not seen since 2005.

"The foreclosure problem is getting better. It is much better than it was last year and better than it was two years ago," says Newport. "It is slowly improving and I think it is going to continue to improve."

So has the housing market bottomed or not? The Daily Ticker's Henry Blodget put that question to Newport in the accompany video.

He thinks we hit a low bottom more than two years ago and have been there ever since.

"The housing market is so much at the bottom that it can really only go up," says Newport. "Late last year things started to pick up and this trend seems to be continuing in all of the releases that have been coming out of the last two or three months."

January new home sales data are also scheduled for release later this week on Friday. In December, the pace of new homes sold slowed for the first time in four months, closing out 2011 as the slowest year on record for homebuilders. Newport expects to see a slight improvement in January

For more recent housing news, see:

Getting a Mortgage Shouldn't Be This Hard: Housing Finance Gets 'Taken to Task'

$26B Mortgage Settlement: Good for Banks, No So Good for Homeowners

Barry Ritholtz: A Housing Bottom Is Nowhere In Sight

Dick Bove on Mortgage Deal: A 'Socialist Option' That's Not Going Away

Obama's Refi Plan Is Another Bank Bailout, Stockman Says: "The Worst Kind of Crony Socialism"

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