Sales and Not Prices are the Major Indicator of Housing Recovery

It’s the volume of houses sold and not the prices of the houses. That, according to a recent article at finance.fortune.cnn.com, is the proper metric for determining if a housing recovery is underway, as many economists in recent months have been saying. 

That bodes well for the real estate sector and the agents themselves who have a real estate license or a real estate continuing education—whether that’s a Florida Real Estate License or a South Carolina real estate CE—who have been pining for a housing recovery since the sector’s death spiral in mid-2006.

Paul Dales of Capital Economics, for instance, believes that higher prices in fact will be a lagging indicator of a housing market rally, if there is one. He says a rising home sales total is the right measure to watch. And that has been what the figures reveal: home sales in 2011 climbed to 4.26 million from 4.19 million in 2010, and more telling, home sales rose by 13 percent in just the last six months.

The article also points out forecasts in a Bloomberg survey predicting that home purchases in February probably improved to their highest level in almost two years. Analysts foresee the combined sales of new and pre-owned properties to reach 4.93 million per year (from 4.89 million in January)—the most robust rate since May 2010.

Housingpredictor.com, meanwhile, has reported that 55 cities are forecast to have higher home values this year than in the last five years as communities in 15 states stabilize their housing markets with positive home sales and home values. Following last year’s debacle for the construction sector, one of its worst years on record, this year’s tough performance is understandably an exciting development for the real estate. Housingpredictor.com cites more job opportunities in these communities as the common denominator in the stabilizing housing markets, plus their business-hospitable state and local governments.

The Midwest states are high on the list with Kansas, Nebraska, and Iowa communities expected to see higher homes sales and home values than last year. The snow-belt states such North Dakota, South Dakota, New Hampshire, New York, Wyoming, Vermont, and Alaska are also well represented on the list. 

The South has placed cities from Florida, Texas, and Louisiana on the list of communities forecast to move toward a stable housing this year.