Skip Navigation Links
US Statistics Local Statistics Contact Us  
Newsletters
U.S. Analysis
Each month, we summarize the latest changes in national market conditions, including building permits and home prices. We monitor more than 70 national statistics.

Local Analysis
Each month, receive the latest employment, building permit and home price information in your market, including growth rates and price appreciation.

Strategic Analysis
Each month, we'll send you an e-mail summarizing the latest research that can help improve your profitability.

Community Analysis
Each month, we feature some of the tips we recommend to our builder clients to help them maximize profits in their communities

Archives
For a complete archive of our analysis...

The Housing Market is about to Become Even More Oversupplied
The Housing Market is about to Become Even More Oversupplied

While both the media and stock investors believe that housing has bottomed, they are unaware of the massive supply of homes that are already in the foreclosure process that will certainly drive home prices down even further when they are sold. We have been projecting a "W" shaped recovery for some time, and we are becoming even more convinced that we are right. The shape of the second leg down is almost completely dependent on the level of government intervention that will take place.

For a number of reasons, banks have not been aggressively taking title to homes and selling them, which has resulted in very few distressed sales in comparison to the actual level of distress in the market. This delay in REO sales, along with historically low mortgage rates and an $8,000 tax credit, has helped to stabilize the housing market - temporarily.

It is very clear that price stabilization is temporary unless something is done. Here are some facts to help project what housing will be like in 2010:

  • 13.54% of the 44.7 million mortgages tracked by the Mortgage Bankers Association are delinquent.

  • 7.57 million homeowners are delinquent, applying the same percentage to the 11.2 million mortgages not tracked by the MBA (55.9 million total mortgages in the U.S.). That means that 10% of all homeowners in the country are delinquent.

  • Based on historical trend analysis by Amherst Securities, 6.94 million homes that are already delinquent will be liquidated, which is more than a one year supply of distressed sales poised to hit the market sometime in 2010 and 2011. During Q1 2005, that figure was only 1.27 million.

  • Defaults continue to grow at the rate of approximately 300,000 per month, assuring that the number of distressed sales will grow and will continue through 2012.

2009 Government Intervention

Government intervention to date has been extremely helpful in preventing an even more dramatic decline in home prices. As shown in the chart at right, housing demand has only fallen to "normal" levels and stabilized there. Without historically low mortgage rates, support for Freddie Mac, Fannie Mae and FHA, and an $8,000 tax credit, how far would sales have fallen this year and what would that decline in demand have done to pricing?

Conclusion

Demand needs to continue to be stimulated to bring down supply, particularly while the country continues to lose jobs. Without continued government intervention, home prices will plummet, banks and the GSEs will continue to lose money, and the economy has virtually no chance of increasing overall employment in 2010.

Economic Growth............................................................................D
Economic growth deteriorated this month as the economy remains very weak. Annual job losses continued, marking one of the worst losses in 60 years. The headline unemployment rate increased to 9.8%, after reaching 9.7% last month. Mass layoff events - defined as a cut of 50 or more jobs from a single employer - also increased this month, and are up nearly 43% year-over-year. Currently, it takes job seekers twice the normal length of time to find employment. The CPI (all items) decreased at a slower rate in August, recording a decline of 1.5%, while the Core CPI (minus food and energy) showed an increase of 1.4%. The final second-quarter GDP growth rate is at -0.7%, which is a significant improvement from the -6.4% decline in the first quarter.

Leading Indicators...........................................................................C-
Many leading indicators continue to improve, and suggest that the worst of the recession is behind us. The Leading Economic Index 6-month growth rate rose in August to its highest level since early 2004. The ECRI Leading Index - an indicator of future U.S. growth - has increased almost 21% since the beginning of the year - the largest growth rate since 1971. Stocks continued to rise through September and the four major indices now range from -10% to +2% year-over-year. The S&P Homebuilding Index rose in August, increasing 14% from the previous month, but remains down 5% year-over-year and down 72% from its peak in July 2005. The Net Employment Outlook turned negative for only the second time in the 20-year history of the index (the first was last quarter), as more employers that were surveyed foresaw staff levels decreasing than increasing. The average hours worked per week by Americans declined slightly in September, reaching its lowest levels on record, partly due to furloughs forced upon both government and private sector employees. The price of crude oil declined to a monthly average of $69.46 per barrel in September, representing a 2% month-over-month decline.

Affordability......................................................................................C-
Affordability improved this month as both mortgage rates and the median resale price fell compared to last month. Currently, our housing-cost-to-income ratio has fallen to 26.7%, which is near the lowest level since we began calculating the index in 1981. Due to the correction in home prices and low mortgage rates, owning a home is now essentially the same cost as renting, making it favorable for first-time home buyers to purchase a home. Household income has fallen 6% year-over-year to $52,856 as a result of job losses and furloughs. Despite the decline, the median-home-price-to-income ratio has fallen to 3.3, which is now equal to the historical average. The 30-year fixed mortgage rate fell again in September, reaching 5.04% by month-end, while adjustable mortgage rates reached 4.52% at September month-end. The Fed's overnight lending target rate remains at a range of 0.00% to 0.25%, which is the lowest level on record. The share of ARM applications increased to 5.6% in the last week of August, according to the Mortgage Bankers Association. However, the share of ARM applications remains extremely low when compared to peak levels above 35% of total applications in early 2005.

Consumer Behavior..........................................................................D-
Consumer behavior was mixed this month. Consumer confidence declined after increasing last month, falling to 53 - far below the historical average of 97. Consumer sentiment increased in September to 73.5, reaching its highest level since January 2008. The Consumer Comfort Index also increased in August to -46.4. The personal savings rate has fallen in the last two months after spiking at 6.9% in May. The U.S. net worth increased nearly two trillion dollars in the second quarter compared to the first quarter. This represents the first increase in net worth in almost two years, and is largely due to recent large gains experienced in the stock market. Despite the recent improvement, the second quarter year-over-year decline is the third worst on record in the 50-year history of this data point, losing $7.4 trillion of wealth in the past year. Both unemployment and inflation increased this month, resulting in a rising Misery Index (the sum of the two rates).

Existing Home Market.......................................................................D+
The existing home market remains weak yet seems to be stabilizing. Seasonally adjusted annual resale activity in August declined almost 3% from last month to 5.1 million homes, an improvement of 3% compared to one year ago, according to the National Association of Realtors (NAR). The rolling 12-month count of resale sales activity has increased for the second month in a row. The national median resale price fell to $177,500, and has declined 12% year-over-year. Weak consumer confidence and increased foreclosure sales continue to put downward pressure on resale prices. The Case-Shiller index, which tracks paired sales, fell 15% in the second quarter of 2009 compared to the second quarter of 2008. In August, the number of unsold homes declined sharply to 8.5 months of supply yet remains elevated compared to history. Pending home sales volume increased this month, and represents a 12% year-over-year gain. As of the second quarter, 32% of all homes with a mortgage were worth less than the original value of the mortgage.

New Home Market............................................................................D
A few components of the new home market improved this month. Builder confidence increased in September to a Housing Market Index rating of 19 - the third consecutive month of an increasing index. The inventory of unsold homes continued to improve and has fallen to 7.3 months of supply. Seasonally adjusted new home sales are down 3% year-over-year and are down 69% from a peak of nearly 1.4 million annual sales in July 2005. The rolling 12-month count of new home sales was flat compared to last month - the first time since 2005 it hasn't declined from the previous month. The median single-family new home price dropped sharply to $195,200 in August from July's $215,600 median - representing an 11.7% year-over-year decline.

Housing Supply.............................................................................F
Seasonally adjusted total permits increased to 579,000 as a result of a large jump in multifamily permits, while single-family permits declined slightly. Seasonally adjusted total new home starts decreased in August to 479,000, due to a 3% drop in single-family starts, and are down 22% from one year ago.


U.S. HOUSING MARKET STATISTICS
Data Current Through October 6, 2009
Historical Range
Grade* Period Statistic Direction** Minimum Average Maximum 1st Year
Economic Growth D
Real GDP (annual rate) D+ 2009Q2 -0.7% Rising -10.4% 3.3% 17.4% 1947
Employment Growth (1-year Change)
  - Non-ag Payroll, NSA D- Sep, 2009 -5,813,000 Improving -5,999,000 1,469,750 5,243,000 1940
Employment Growth Rate
  - Non-ag Payroll, NSA D- Sep, 2009 -4.2% Improving -7.6% 2.2% 16.4% 1940
Unemployment Rate F Sep, 2009 9.8% Rising 2.5% 5.6% 10.8% 1948
  Average Length of Unemployment (Weeks) Sep, 2009 26.2 Increasing 7.1 13.7 26.2 1948
  Median Length of Unemployment (Weeks) Sep, 2009 17.3 Increasing 4.0 7.3 17.9 1948
  % of Labor Force Unemployed 27 weeks and over Sep, 2009 3.5% Increasing 0.1% 0.8% 3.5% 1948
U.S. Initial Jobless Claims D Sep, 2009 530,000 Declining 162,000 359,135 695,000 1967
Mass Layoff Events, SA (YOY % Change) D+ Aug, 2009 43% Increasing -48.1% 8.6% 132.1% 1995
Productivity B- 2009Q2 6.6% Rising -10.8% 2.3% 17.5% 1947
Retail Sales F Jul, 2009 -8.5% Rising -10.6% 4.6% 11.0% 1992
Inflation
  Core CPI A- Aug, 2009 1.4% Declining 0.7% 4.0% 13.6% 1958
  Full CPI B- Aug, 2009 -1.5% Rising -15.8% 3.4% 23.7% 1914
Personal Income Growth, nominal F Jul, 2009 -2.4% Improving -3.2% 7.2% 14.1% 1960
Federal Deficit (last 12 mos., $mil curr.) F Aug, 2009 -$1,520,441 Increasing -$1,520,441 -$274,084 $342,250 1980
U.S. Immigration as a % of Total Population 2008 0.4% Increasing 0.1% 0.2% 0.7% 1950
Total Population Growth 2008 1.0% Increasing 0.9% 1.2% 1.8% 1951
Total Households 2009Q2 112,119,000 Increasing 56,848,000 87,590,185 112,119,000 1965
  - Growth Rate D- 2009Q2 0.8% Increasing 0.3% 1.6% 4.1% 1966
Owned Households 2009Q2 75,607,000 Increasing 35,728,000 57,387,393 75,896,000 1965
  - Growth Rate D 2009Q2 -0.1% Increasing -1.8% 1.7% 4.1% 1966
Rented Households 2009Q2 36,512,000 Increasing 21,052,000 30,202,809 36,512,000 1965
  - Growth Rate B 2009Q2 2.8% Increasing -3.3% 1.2% 5.1% 1966
Historical Range
Leading Indicators C- Period Statistic Direction** Minimum Average Maximum 1st Year
Leading Econ. Index (Ann. Growth Rate Last 6 Mos.) B- Aug, 2009 8.9% Rising -19.5% 2.6% 18.9% 1959
ECRI Leading Index A+ Aug, 2009 20.8% Rising -29.7% 1.5% 21.3% 1967
Manpower Net Employment Outlook F 2009Q3 -2% Flat -2% 16% 25% 1989
U.S. Vistage CEO Confidence Index 2009Q2 69% Increasing 49% 92% 116% 2003
CEO Economic Outlook Survey 2009Q2 19% Increasing -5% 76% 104% 2002
U.S. Average Hours Worked per Week Sep, 2009 33.0 Declining 33.0 35.3 38.8 1964
Temporary Employed Workers F 2009Q2 -30.2% Declining -30.2% 5.0% 30.5% 1990
Corporate Profit Growth (pre-tax) D 2009Q2 -10.9% Rising -25.1% 7.5% 58% 1947
Residential Investment as % of GDP (nominal) F 2009Q2 2.4% Declining 2.4% 4.8% 7% 1947
Interest Rate Spread
10-year Treasury Sep, 2009 3.43% Declining 2.29% 6.37% 15.32% 1953
2-year Treasury Sep, 2009 0.98% Declining 0.80% 6.61% 16.47% 1976
  Interest Rate Spread B+ Sep, 2009 2.45% Narrowing -2.15% 0.77% 3.39% 1976
3-month LIBOR Sep, 2009 0.30% Declining 0.30% 4.42% 8.75% 1990
3-month Treasury Sep, 2009 0.12% Declining 0.03% 5.14% 14.28% 1982
  TED Spread B Sep, 2009 0.18% Narrowing -0.09% 0.49% 3.41% 1990
Stock Market (Return over last 12 months)
  Dow Jones   C- Sep, 2009 -10% Rising -72% 7% 136% 1930
  S&P 500 D+ Sep, 2009 -9% Rising -45% 8% 53% 1950
  NASDAQ C Sep, 2009 2% Rising -60% 11% 105% 1984
  Wilshire 5000 D+ Sep, 2009 -8% Rising -44% 7% 45% 1990
  S&P Super Homebuilding C- Aug, 2009 -5% Rising -58% 12% 116% 1994
Tougher Standards on Business Loans - Large Firms D+ 2009Q3 32% Decreasing -24% 10% 84% 1990
Tougher Standards on Business Loans - Small Firms D+ 2009Q3 34% Decreasing -24% 9% 75% 1990
Crude Oil Price (Current $) D+ Sep, 2009 $69.46 Decreasing $13.80 $35.76 $132.11 1946
ISM Manufacturing Index C Aug, 2009 52.9 Increasing 29.4 52.6 77.5 1948
ISM Non-Manufacturing Business Activity Index C- Aug, 2009 51.3 Increasing 33.3 56.1 67.7 1997
Historical Range
Affordability C- Period Statistic Direction** Minimum Average Maximum 1st Year
Housing Cycle Barometer A- Aug, 2009 1.2 Decreasing 0.0 4.9 10.0 1981
US Median Home Payment / Income Ratio Aug, 2009 26.7% Decreasing 24.8% 34.6% 58.2% 1981
US Median Home Price / Income Ratio C Aug, 2009 3.3 Decreasing 2.8 3.3 4.6 1981
Mortgage Rates, Fixed A+ Sep, 2009 5.04% Declining 4.81% 9.03% 18.45% 1971
Mortgage Rates, Adjustable B+ Sep, 2009 4.52% Declining 3.41% 6.36% 12.20% 1984
Fixed/Adjustable Spread F Sep, 2009 0.52% Widening (0.0%) 1.80% 3.36%
Fixed/10-year Spread C Sep, 2009 1.61% Widening 0.53% 1.70% 4.86%
Fed Funds Rate Sep, 2009 0.15% Flat 0.10% 5.55% 19.10% 1954
Percentage of Adjust. Loans A- Aug, 2009 5.6% Rising 0.8% 17.0% 36.6% 1990
Equity/Owned Home (Current $) C 2009Q2 $104,096 Increasing $69,869 $105,215 $183,327 1952
Debt % in Home (LTV) F 2009Q2 56.9% Decreasing 19.3% 34.6% 58.1% 1952
Median Household Income 2009Q2 $52,599 Increasing $20,402 $38,157 $55,406 1967
  - Growth Rate, nominal F 2009Q2 -6.0% Decreasing -0.2% 3.8% 8.3% 1968
Historical Range
Consumer Behavior D- Period Statistic Direction** Minimum Average Maximum 1st Year
Consumer Confidence Index D- Sep, 2009 53.1 Falling 25.3 96.6 144.7 1967
Consumer Sentiment Index D+ Sep, 2009 73.5 Increasing 51.7 86.7 112.0 1978
Consumer Comfort Index F Aug, 2009 -46.4 Increasing -51 -9 38 1985
Revolving Cons. Credit per Household Jul, 2009 $7,601 Decreasing $406 $3,712 $8,262 1977
  - Growth Rate A+ Jul, 2009 -7.9% Decreasing -7.9% 9.8% 28.2% 1978
Personal Savings Rate D+ Jul, 2009 4.2% Declining -2.7% 6.8% 14.6% 1959
U.S. Net Worth Growth Rate F 2009Q2 -12.3% Increasing -17.2% 7.3% 17.4% 1957
Financial Obligation Ratio D 2009Q2 18.1% Decreasing 15% 17% 19% 1980
Misery Index (Unemployment + Inflation) C+ Aug, 2009 8.20 Rising 2.97 9.41 21.98 1948
Historical Range
Existing Home Market D+ Period Statistic Direction** Minimum Average Maximum 1st Year
S&P/Case-Shiller� U.S. Price Index (YOY % Change) F 2009Q2 -14.9% Rising -19.1% 3.9% 15.7% 1988
NAR Single-Family Median Home Price Aug, 2009 $177,500 Declining $19,700 $99,127 $230,900 1968
NAR Single-Family Annual Price Appreciation F Aug, 2009 -12.1% Accelerating -16.8% 5.6% 17.4% 1969
Freddie Mac Annual Price Appreciation F 2009Q2 -4.5% Decelerating -5.2% 5.8% 15.2% 1971
Annual Sales Volume, SA B- Aug, 2009 5,100,000 Decreasing 1,370,000 3,762,740 7,210,000 1968
Existing Home Inventory for Sale, SA D Aug, 2009 3,622,000 Decreasing 1,510,000 2,498,138 4,575,000 1982
Months Supply of Unsold Homes, SA C- Aug, 2009 8.5 Decreasing 3.6 7.3 13.8 1982
Purchase Mort. App. Index, SA C Aug, 2009 277.7 Rising 53.5 272.7 529.3 1990
Pending Home Sales Index, SA D+ Jul, 2009 97.6 Increasing 80.4 105.0 128.2 2001
Homeownership Rate B 2009Q2 67.4% Rising 62.8% 65.3% 69.2% 1965
Historical Range
New Home Market D Period Statistic Direction** Minimum Average Maximum 1st Year
Housing Market Index F Sep, 2009 19 Increasing 8 52 78 1985
Multifamily Condo Market Index F 2009Q2 14.7 Increasing 7.8 36.7 66.9 2002
Median Price, NSA Aug, 2009 $195,200 Decreasing $17,200 $102,787 $262,600 1963
Annual Appreciation Rate F Aug, 2009 -11.7% Decelerating -14.6% 5.8% 24.5% 1964
Constant Quality Price Index (YOY % Change) F 2009Q2 -6.2% Decelerating -7.8% 4.8% 16.8% 1963
Sales Volume, SA F Aug, 2009 429,000 Increasing 329,000 688,295 1,389,000 1963
New Home Inventory for Sale, NSA B Aug, 2009 262,000 Decreasing 175,000 328,279 570,000 1963
Months Supply of Unsold Homes, SA C+ Aug, 2009 7.3 Decreasing 3.5 6.1 12.4 1963
  Months of Homes Completed, SA B- Aug, 2009 3.2 Decreasing 0.8 1.9 6.1 1973
  Months of Homes Under Const., SA D+ Aug, 2009 3.1 Decreasing 2.0 3.4 5.9 1973
  Months of Homes Not Started, SA C Aug, 2009 1.1 Increasing 0.4 1.0 1.9 1973
Historical Range
Housing Supply F Period Statistic Direction** Minimum Average Maximum 1st Year
New Housing Units Completed, SA F Aug, 2009 760,000 Decreasing 760,000 1,520,398 2,299,000 1968
Single-Family Starts, SA F Aug, 2009 479,000 Decreasing 357,000 1,083,355 1,823,000 1959
Multifamily Starts, SA F Aug, 2009 119,000 Increasing 91,000 437,674 1,144,000 1959
  Total Starts, SA F Aug, 2009 598,000 Increasing 479,000 1,521,030 2,494,000 1959
Single-Family Permits, SA F Aug, 2009 462,000 Decreasing 342,000 932,871 1,798,000 1960
Multifamily Permits, SA F Aug, 2009 117,000 Increasing 101,000 489,709 1,385,000 1960
  Total Permits, SA F Aug, 2009 579,000 Increasing 498,000 1,423,171 2,419,000 1960
Manuf. Housing Placements, SA F Jun, 2009 47,000 Decreasing 47,000 224,602 429,000 1980
  Total Supply, SA F 626,000 Increasing 553,000 1,678,115 2,379,000 1980
Total Housing Stock   2009Q2 130,828,000 Increasing 63,668,000 98,263,331 130,840,000 1965
  - Growth Rate D- 2009Q2 0.7% Decreasing 0.1% 1.7% 3.9% 1966
Homeowner Vacancy Rate F 2009Q2 2.5% Declining 0.9% 1.5% 2.9% 1965
Overall Grade D (Based on a straight average of the 7 Major Factors Above)
SA stands for Seasonally Adjusted Annual Rate.  NSA stands for Not Seasonally Adjusted.
* The best 15% ever are "A" scores, the average is a "C", and the worst 15% ever are "F" scores, with distributions throughout.
** Direction is in comparison to the most recent data for the prior month's statistic.  A positive number that says "Declining" means  
that the number was more "positive" last month, and vice versa. Due to revisions, prior month's data may change. As a result,  
this month's direction indicated may not coincide with the statistics reported in the prior month.
*** A high number is better affordability.  The calculation is 30% of the Median Household Income divided by the Mortgage Payment
  on the Median-Priced home.