Several economic indicators of the housing market’s health are stronger than their historical levels.
Of note is the year-over-year growth in American households, which is at the highest in nearly a decade.
But via Gluskin Scheff’s David Rosenberg, there are a dozen reasons to remain confident in the US housing recovery:
- The bond rally has pushed down mortgage rates to 3.6% from 4.3% a year ago.
- The Credit Managers’ Index of lending professionals climbed to 55.1 in January from 54.9, indicating that mortgage guidelines have eased.
- Mortgage credit across banks has climbed 4% at an annual rate over the past four weeks.
- Employment in the 25-34 age group increased 2.6% in the last 12 months — the fastest pace in 15 years.
- Among first-time homebuyers, the employment rate is at a six-year high at 76.6%.
- In the past year, net household formation has grown 10 times to 2 million. That’s the highest level since July 2005.
- It now takes less time to sell a house — the median time between building completion and sale is three months, versus the historical norm of five months.
- Home inventories are also below historical levels. There is a “razor-tight 4.4 months’ supply of existing homes on the market for sale.”
- The University of Michigan home buying plan index has held a 12-month high in the past two months.
- Residential construction as a share of GDP is at 3.3% in this economic cycle. That’s lower than the 5% average and the lows of previous recessions.
- Single-family building permits surged to near-seven-year highs at the end of 2014, up 8% on a year-over-year basis.
- Data from the National Association of Home Builders showed that home shopper traffic in the past three months is on par with the strongest level in 2005.
So there’s your bull case.