New home sales pop 6.6% in September

The Census Bureau just released new home sales figures for September. Here's a recap:

* Sales popped 6.6% to a seasonally adjusted annual rate of 307,000 from 288,000 in the prior month. That was better than the 300,000 sales that economists were looking for, but still only puts us back to roughly the level of sales we had in June. Sales rose in three out of four regions of the country -- by 3.2% in the South, 3.4% in the Northeast and 60.6% in the Midwest. Sales fell 9.9% in the West.

* The number of homes for sale continued to fall - to 204,000 from 206,000 in August. That's the lowest level of new home supply since July 1968. The months supply at current sales pace indicator of inventory dipped to 8 from 8.6 a month earlier.

* The median price of a new home ticked up 1.5% to $223,800 from $220,500 in August. That was also good for a 3.3% year-over-year rise.

The new home market continued to recover a bit from the summer doldrums, notching a gain of almost 7% in September. We saw broad-based regional strength, led by the Midwest, and the supply of homes for sale shrank yet again. In fact, we haven't had this few new homes on the market since 1968, the year the first ATM machine was installed in the U.S. and the Big Mac was introduced.

Still, we clearly aren't seeing a vigorous rebound in demand. Nor should we expect to any time soon. So many buyers have been burned so badly that housing demand is likely to remain depressed for years. Competition from cheap, distressed, used homes is also working against the home builders.

September existing home sales surge 10%

Existing home sales figures for September were just released. Here's what the numbers showed:

* Sales surged 10% to a seasonally adjusted annual rate of 4.53 million from 4.12 million in August. That was better than the 4.3 million in sales that analysts were expecting, but it's still down 19.1% from a year ago.

* Regionally, sales rose 5% in the West, 10.1% in the Northeast, 10.6% in the South, and 14.5% in the Midwest. By property type, single-family sales rose 10% and condo/co-op sales gained 9.8%

* The supply of homes for sale dipped 1.9% to 4.04 million from 4.117 million a month prior. On a year-over-year basis, supply was up 8.9%. The months supply at current sales pace indicator of inventory fell to 10.7 from 12 in August. The median price of an existing home slumped 3.3% from a month prior and 2.4% from a year earlier.

Existing home sales surged last month, as buyers took advantage of near-record low mortgage rates and bargain-basement pricing. Another likely contributing factor to last month's strength? Any contracts signed by buyers using the home buyer tax credit had to close by September 30.

Combing through the data, you see that sales were strong in all regions of the country, with the Midwest leading the way. The pickup in activity helped whittle away at the mountain of inventory on the market. But we still haven't made much progress overall. That helped keep the pressure on prices, which fell from both the prior month and year. Longer term, we should continue to see stabilization in the housing market as 2010 rolls over into 2011. But we won't witness a vigorous recovery thanks to lackluster job growth, inventory pressures, and ongoing problems in the mortgage market.

Housing starts inch up, permits fall

The latest figures on home construction were just released. In September ...

* Housing starts rose 0.3% to a seasonally adjusted annual rate of 610,000 from 608,000 in August. That's the highest since April, and above forecasts for a reading of 580,000. On the other hand, building permits slumped 5.6% to 539,000 from 571,000 a month prior. That's the lowest level since April 2009 and well below the consensus forecast of 575,000.

* By property type, single family starts popped 4.4% while mutifamily starts dropped 9.7%. The permit data showed a similar split, with single-family permits inching up 0.5% (the first gain since March) and multifamily permits tanking 20.2%.

* Regionally, starts gained 2.9% in the Northeast and 4.8% in the South. They fell 3.6% in the West and 8.2% in the Midwest. Permits were weak across the board, falling 1.5% in the Northeast, 4.3% in the Midwest, 4.7% in the South and 10.6% in the West.

The construction industry perked up a bit in September. Overall starts hit a six-month high and the single-family market in particular showed relative strength. We also learned yesterday that home builders are slightly more optimistic about the future these days. That's a change of pace for the down-on-its-luck industry.

Still, there's no any evidence of a robust recovery here. Starts remain mired in a general range of 500,000 to 650,000 units -- a far cry from the 2-million-plus numbers we were putting on the board a few years ago. Why aren't builders doing more? Because we're only slowly but surely chiseling away at the mountain of distressed "used" homes on the market. Until that supply mountain shrinks, builders won't have any reason to ramp up production. I expect construction activity and construction hiring to remain muted for some time.

Pending home sales pop

Pending home sales figures from the National Association of Realtors were just released. Sales popped 4.3% in August after gaining 4.5% a month earlier. That was better than the 2.5% increase economists were looking for, though sales are still down more than 18% from a year earlier. Regionally speaking, sales rose 2.1% in the Midwest, 6.4% in the West, and 6.7% in the South. They fell 2.9% in the Northeast.

Pending sales have clearly stabilized in the wake of this summer's tax credit-driven plunge. Indeed, we saw August gains in three out of four regions, led by the South. But when you step back and look at the big picture, you realize that watching the housing market these days is a bit like watching a pet rock. You keep hoping for it to sit up, roll over, or do something. But it doesn't. It just sits there marking time.

Frankly, that's what I expect to see for the foreseeable future. We have cheap mortgages and cheap homes. Yet the conditions for a substantial improvement aren't in place, with the economy weak and consumer confidence lacking. That means pricing and sales will likely remain stuck in the mud.