What the resale market tells you about new home construction

December 20, 2011

by Scott Sambucci

6 comments

If you want to know if new home starts are going higher, watch the active market listings.

Residential housing reported higher numbers for November today. What do homebuilders know about housing that surprised the stock market today?

Home prices are getting less bad:

Year-over-year Housing Market Ask Prices: Altos 20-City Composite

How? Inventory is down.  While the foreclosures are clogged somewhere in the pipeline, there’s just not much available for Joe & Sally Homebuyer:

Year-over-year Inventory: Altos 20-City Composite

The homebuilders see what we see – when sellers get more confident on pricing, builders pick up their new home construction.  (Data measures at a 77% correlation):

Monthly Single-Unit housing starts (July 2010 - Nov 2011): US Census, November 20, 2011

Looking at quarterly data since 2007, there’s more of the same. (Data measures at a 76% correlation):

Housing

Quarterly Single-Unit housing starts (2007-2011): US Census

Link for US Census/HUD press release.