A serious sign that today’s housing recovery is in need of antipsychotics . . . not your quintessential rebound

Trulia; Where has your “Housing Barometer” gone?

According to the site, it’s metrics that the index uses to gauge the market recovery, that might normally provide a telling snapshot of its health,  however truth be told they no longer parallel  in producing an easily viewable picture.                                                                                                

The site uses three metrics that the gauge uses to compute:

1            Construction starts

2               Existing-home sales

3            Delinquency and foreclosure rate

However lately these findings show a seemingly schizophrenic symptoms that confound the index’s and is inhibiting its ability to diagnose the market’s health accurately.

So you are asking why I asked where our the drugs to counter act this illness? Why is it that today’s market, were it a human patient, and might be prescribed antipsychotics?

What’s throwing the digits?

Improvements in existing-home sales and delinquency and foreclosure rates have far outpaced improvement in construction. The good news: Exsiting-home sales are 99% back to normal and the not so good news, construction is just 40% back to normal. So as a byproduct using a single number to gauge the recovery is not the best approach, at least for right now.   

So as for Trulia reasons they disclosed  for the discrepancies include:  Sluggish construction growth is that household formation, which fuels demand, is only at half its normal rate. Trulia’s final and most recent Housing Barometer found that the housing market was 67 percent back to normal in August 2013, its healthiest state since the “Great” Recession as it has been dubbed.

Trulia’s barometer is based on the following data:

• Construction starts increased to 891,000 in August, up 1 percent from July but still only 40 percent back to normal.

• Existing-home sales hit 5.48 million in August, their highest level in 6 1/2 years and 99 percent back to normal.

• The delinquency and foreclosure rate dropped to 8.86 percent, its lowest level in more than five years and 60 percent back to “normal”.

Just a little something to think about as you peruse homes online.