The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates.
There was plenty of reason for terminal housing bulls to snort and pound their hooves this week.
First, the Case-Shiller home price index rose nearly one percent in December leaving the year with a 6.8 percent gain. Then, we found out new home sales rose 15.6 percent in January to a 437,000 unit pace. Finally, pending home sales increased 4.5 percent in January providing comfort that further actual sales will increase in coming months.
All of these figures were rightly touted in the press as "four year highs" or "the strongest performance since 2008."
But a look at longer term data demands a more sobering assessment.
Focusing on home prices first, we see the home price level, remains at its equivalent in 2003, without adjusting for inflation.
New home sales figures are even worse, especially considering we have been constructing homes below the natural replacement rate for nearly six years.
Recent data in the pending home sales index looks more encouraging, but comparing this graph with the one above, we see that pending home sales are less frequently translating into actual home sales growth.
Because consumers contribute about 70 percent of our nation's GDP and most consumers have to live somewhere, it is difficult to predict any solid recovery without considerable and consistent gains in the housing sector.
I am keeping a close eye on these data, however it feels far too soon to start stamping and snorting.\
*Data source for graphs is Bloomberg.
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