US Housing update

After several requests, and a few opinions, we took a look at the Housing sector to see how our bull market was unfolding. Our first report:, and follow up:, were over a year ago.


Our leading indicators, Building Permits and Home Builder Sentiment, are still rising off their expected 2009-2011 double bottom lows. In fact, building permits have nearly doubled from the lows of 2009 reaching their highest levels in five years.


Home builder sentiment has risen from a low of 8% in 2009 to well into the 40’s% in recent months. Recently reaching its highest level in nearly eight years. We are not expecting a downturn in housing prices, which is next, until six to twelve months after both of these indicators have turned down.


After a peak in New home prices in 2007 they declined about 25% into an early 2009 – late 2011 double bottom low. Since that low they have not only risen, but were just reported exceeding the highest price of the 2007 peak. New home prices have risen more than 28% in less than two years.


Fueling this rise has not only been historically low mortgage rates. Thanks to the FED’s Operation Twist and Mortgage Backed Securities buying programs. Plus, a somewhat muted economic recovery, and the increase in affordability, by not only lower rates and more jobs. But also by a substantial decline in relative household debt. Currently at its lowest level in more than 30 years.


Existing home prices, as measured by Case-Shiller, have risen 9.5% nationwide since their early 2012 low. Keep in mind this lagging indicator is inflation adjusted using the CPI, and has a two month lag in reporting data. Their latest reporting period was for February. So the actual price increases have probably been 2% to 3% higher. Nevertheless, we have been expecting a 15% to 25% increase in this index, from the lows, before the current bull market in housing ends. Which has at least another year, and probably more, to go. Happy house hunting.

About tony caldaro

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34 Responses to US Housing update

  1. pa100 says:

    Thanks. I wonder why lumber futures are plunging?

    • tony caldaro says:

      We took a look at Lumber earlier today.
      For the past 25 years it has traded between $160 and $420. With a few outliers.
      The peak price occurred in 1993 @ $495, and the low of course in 2009 @ $138.
      The recent high was $405 this year.
      It is a volatile commodity prone to big swings.

  2. manunidhi21 says:

    Hi Tony..
    As your update on Canada TSX which was bearish and currency will we correlate Canadian housing market data as bearish w.r.t to markets…I moved last year to this country and to me it looks a bubble but price increase does not stop ..far expensive than US on an average..

    I know you do not track Canada at all but just to throw some light..

    • tony caldaro says:

      Hi Manun
      The next equity bear market should shake out some of these bubble-like real estate markets around the world.

      • manunidhi21 says:

        Thnx my father used to say liquidity is no ones an equity worth of $10 which already values $100 may go in this QE to $200 and then fall back between $ 10-100 and then again you get QE and which never ends…

        The personal disposable income on an average is very less in Canada and taxes too high..a debt of $125000 per person with an average income of $ 36000 annualized..highest in the world..

      • manunidhi21 says:

        I disagree..among three countries i experienced..India has best banking system..tough to fall apart..north america is totally privatized..

      • vorfahrt says:

        It seems that most of the RE buble hold-outs are tied to commodity economies (Australia, Canada etc.) They will get canned with raw materials going out of fashion.

    • No says:

      manunidhi21: are you living in Vancouver? The housing bubble there is largely due to the rich immigrants from China/HongKong. They have driven the RE market up as they did back home – I know a few of them doing just that; they keep buying a new place every couple of years. I’m in the east coast and there is no RE bubble here, housing price has been coming down in last couple of years.

  3. M1 says:

    It looks like my stops will be hit at the open.
    If they are triggered, I will go long once again. That’s the game.
    This strong gap up looks promising.

  4. H D says:

    USA! great update Tony, Just read stats for my zip online today. avg days on market 47, prices up 10.3% YOY and sales price as a % of list price =97%, median price 249,572 and avg price 415,888. Still some room to return to the peak but I am alarmed at how quickly it’s back en vogue. AZ was hit harder than some areas – I remember how motivated seller were. If you weathered the storm you are doing much better now.

  5. Leetired says:

    Thanks Tony
    Most of the good stuff is gone in the top rated school districts in the west/north suburbs but still some redunkulous deals to be had in Chicago.
    Florida you have to go inland a ways to get any deals in other words back to normal. Only thing that could screw things up is the “walk away ” culture of the last several years sticking around.

  6. if average sales prices exceed 240k in the commerce dept. data, and it is very likely they will, it is my humble opinion, that 270-280 realty prices are quite possible with only slight pullbacks there after. in other words, buy your homes and you will never look back as you won’t get a second chance to buy this cheaply.

  7. “I Just Let Things Slide”, roadmap for tuesday:

  8. bman64 says:

    Thanks heaps Tony, ur a legend…

  9. Cliff Uzan says:

    Hi Tony,
    Thank you for this update. Why do you feel that existing home prices, as measured by Case-Shiller, will not exceed their peak before the bull market in RE is over? And, if not before the bull market in RE is over then when will existing home prices exceed their peaks? Thanks again!

  10. Cliff Uzan says:

    Hi Tony,
    Thank you for this update. Why do you feel that existing home prices, as measured by Case-Shiller, will not exceed their peak before the bull market in RE is over? And, if not before the bull market in RE is over then when will existing home prices exceed their peaks. Thanks again!

  11. Thanks a lot Tony for keeping us updated.

    sell home fast

  12. Pingback: » US Housing update | the ELLIOTT WAVE lives on

  13. vorfahrt says:

    Interestingly, a massive run-up in real home prices as per Case-Shiller by 25% will mean an even larger nominal gain and on top of that it will happen with rising mortgage rates. Those are all things the many RE bears out there tell us would be simply impossible. This development will upset many bears in the RE market as it has already in the stock market. After a similar run-up in the RE market as has already happened in the stock market, I will probably have to go the zoo to find any bears left. Right now, blogs like the housingbubbleblog or more general zerohedge still have a big following of convinced bears. Here in Phoenix, the RE market has already turned with a thunder.

  14. M1 says:

    My question.
    Was that all ? a 25% drop in housing prices and we start again ?
    I mean, the housing bubble is over and we are back to happy days ? =)

  15. M1 says:

    And you did it, Tony. You gave us another extraordinary and easy to understand special report.
    Thanks once again

  16. mkmason2013 says:

    Tony, what can I say? Another masterfully crafted Report! Excellent analysis! Thank you so much! M

  17. ctfp999 says:

    Hi Tony,

    Do you think the US housing will decline at the same time as the next market down turn in 2014? Just wonder about the timing of US housing versus market direction. Have a great holiday weekend. TIA.


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