DB's latest analysis confirms that US housing price stabilization is now taking place (as
predicted here back in January) as inventories continue to decline. The chart below shows the ratio of homes for sale to the total number of households.
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| Source: DB (NAR, Census, Haver Analytics DB Global Markets Research) |
DB: - Much of the economic data has taken a turn for the
worse over the past few months, but the housing
sector data has largely proved resilient in the face of a
sputtering labor market and mounting economic
uncertainty. The housing sector fell into decline sooner
than the broader economy ahead of the 2007-2009
recession, and it took longer to regain traction.
However, our analysis indicates that the excesses of
the “housing boom” have been largely eliminated,
whereby a lasting recovery can proceed so long as
overall economic momentum and income growth are
not disrupted in any meaningful way.
The fact remains that new home construction is proceeding at half the rate it should be to keep up with growth in the number of households. The inventory of new homes is now at the lowest level since this data series was started back in 1963.
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| New single family homes for sale in the US (thousands of units) |
Again it is important to point out that this improvement in the US housing market is a result of falling supply due to demographics rather than improved demand driven by the economy. And certainly rising rents coinciding with rapidly declining mortgage rates (affordability) make the choice to buy a home that much easier.
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