Figures released today by the Census Bureau of the Department of commerce showed the level of new home sales that took place in the month of February. The figures showed 313k sales in that month. Sales in January had come in at 318k. The statistics released today were also broadly in line with what analysts believed would happen. The consensus view had been for sales of around 320k. The S&P 500 (INDEXSP:.INX) was almost unchanged as the news was released.
The sales figures come on the back of other February housing indicators from earlier in the week, though they may be too muddled to give real projections of the market’s performance. Housing starts figures released on Tuesday showed 698 thousand sales in February a very slight decrease from the January numbers which had been revised upward. Those figures show a steady but low level of starts following an apparent boom in December and January. The existing home sales figures from yesterday painted a picture of a market on a stable rising path.
With the data being muddled and inconclusive it is difficult to know what to expect from the housing market in the months to come. It is clear that the market remains highly depressed and that there is some kind of recovery going on. What remains unclear is the stability and the magnitude of the recovery that is taking place. Many analysts choose to see the figures as representing a slow and steady increase to potential numbers. It is difficult to suggest such an easy and simple result when viewing the real figures. The picture is certainly blurrier than hoped.
The recent figures from the housing market have given a picture of one hobbling to recovery rather than racing ahead. There is still a great deal of difficulty for people to secure credit. Banks are still wary after the housing bubble that has helped cripple the economy for the last four years. Consumer demand is also low for housing as the market remains unstable. It is expected that this will increase to high levels once confidence in the housing market returns. There is a certain amount of latent demand for housing that has been building in size since the crash. Once there is a level of stability in the market confidence will return and a stable price level should come into being. This will shift the latent demand into real demand.