Tuesday, June 16, 2009

Did May Move toward a Housing Recovery?

A review of my definition of a housing recovery:

"...it has been no surprise that the housing bust has been characterized by: (a) sharply falling housing construction, (b) sharply falling housing prices, and (c) costs of home construction that have fallen, but not as much as housing prices have. If it were not for the fiscal stimulus, a housing recovery would have all of these elements in the opposite direction. When it happens, the fiscal stimulus will add a wrinkle: more of the housing recovery may be in the form of rising prices rather than rising construction activity (that's crowding out)."

I already noted that housing construction employment continued sharply down in May. But this morning's housing starts report suggests that June construction activity might improve, because (seasonally adjusted) single-family housing starts were higher in May than they have been in six months. Starts for multi-family units fell, though.

This morning the BLS released the May PPI for housing construction, and it increased for the first time in nine months:

Next we need to see housing price indexes reported by OFHEO and Case-Shiller increase by more than the construction PPI increases (the May values of the housing price indexes will not be released for another six weeks), and to see more actual housing construction (May value to be released July 1).

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