Housing Market Still Faces Long, Slow Recovery

The real estate market faced a minor setback in its road to recovery in April, according to Trulia’s Housing Barometer. 

Each month, the Housing Barometer charts the rate at which the housing market is moving back to “normal” by looking at three metrics, including construction starts, existing home sales and the delinquency-plus-foreclosure rate.

Construction was the only category to experience a decline, falling 16% to a five-month low of 853,000. The multi-family sector led the decline, dropping 38% month-over-month.

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Building permits rose 14% from March, which Trulia notes should lead to a bounce back in construction starts. Currently, construction starts are just 37% of the way back to normal.

Existing home sales rose, especially for conventional sales. 

Sales rose 0.6% in April to a seasonally-adjusted annualized rate of 4.97 million. On a year-over-year basis, existing home sales rose 9.7%.

Overall, existing home sales are 69% back to normal, reports the Housing Barometer.

Another indicator of housing’s recovery, delinquency and foreclosure rate fell sharply for April.

The share of mortgages in delinquency or foreclosure dropped to 9.38% in April, the lowest level since September 2008. 

“As the economy recovers, fewer people are falling behind on their mortgage payments,” writes Trulia’s Chief Economist Jed Kolko. “Also, more homes are moving through the foreclosure process, though at different speeds depending on state foreclosure laws.

The combined delinquency+foreclosure rate is more than halfway back to normal for the first time since the market’s crash, notes Kolko, at 55%.

Averaging the percentages of these metrics together, Trulia finds that the housing market is now 54% of the way back to normal. 

In March, the Housing Barometer showed that the recovery was 56% back to normal. 

“A bounce-back in construction next month, combined with this month’s big drop in delinquencies+foreclosures and the slow increase in sales, would put the housing recovery right back on track,” Kolko.

Written by Jason Oliva

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