Tuesday, March 17, 2009

Flashback: Housing Prices in 2009

Last month I floated the idea that the housing market had hit its bottom. The two things I saw were: a December increase in housing prices as measured by the OFHEO, and a January decrease in the PPI for residential construction that was a lot less than it had been in prior months.

I noted that, lacking any additional data, these could be "aberrations."

Today I see two more data releases that add to the likelihood of this possibility: the PPI for residential construction fell even less in February, and housing starts increased in February for the first time since June 2008. The increase was across-the-board: seasonally adjusted and unadjusted, both single family and multi-family homes, and all regions except the West.

More boldly I said in December that I "expect to see housing construction resume next summer, if not earlier." I am sticking to that prediction.

The chart below shows why I think the construction PPI has been evolving differently so far in 2009.

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