Data on the housing market continue to be overwhelmingly positive. The 4.8 million pace for existing home sales reported for August is somewhat above trend. The inventory of unsold homes is just over six months' supply at the current sales rate. A continuing flow of distressed sales into the market is not likely to radically change the picture. While both sales rates and prices are pretty much back to their trend levels, construction remains far below trend; although, even here the picture is improving. The rate of 750,000 starts reported in August is 29.1 percent above the rate from a year ago. With the vacancy rate falling back sharply from its peaks in 2009 and 2010, starts are almost certain to continue to rise. Residential construction can be expected to provide a substantial boost to the economy through the rest of 2012 and through 2013. Starts are not likely to get back to the 2 million peaks of the bubble years, but we will likely get to at least a 1.3-1.4 million range by 2014.
For more, check out our latest Housing Market Monitor.