Tuesday, July 28, 2009

Housing market stabilizing?

There's growing evidence that the housing slump may have finally bottomed out.

Yesterday, the Commerce Department reported that new home sales in June increased 11 percent over the previous month and were at their highest level since November.

The Case-Shiller 20-city housing price index edged up half a percent in May, the fourth consecutive monthly increase.

Despite the recent increases, sales levels and prices remain at very low levels. The new home sales levels are still 21 percent below where they were a year ago, and the price index is 17 percent below where it was a year ago. And, of course, last year's figures were depressed far below their highs from a few years earlier.

Don't look for a boom anytime soon; the weak economy and high unemployment are likely to continue to exert a drag on housing. Indeed, the Conference Board reported that its index of consumer confidence fell in June, mostly on concerns regarding unemployment.

The good news, though, is that housing itself doesn't appear to be pulling the economy down.