My Real Estate Blog

Last week's 10% decline in new home starts got all the headlines, and even caused some of Wall Street's doomsday analysts to talk again about a "double dip" in the US housing market.

But how important an indicator was that drop in starts, really?  Any decline in housing production is meaningful and worth noting but in this case, everybody familiar with the housing market predicted this drop two to three months ago!

Why? Because the expiring federal tax credits pulled tens of thousands of transactions forward this year into the months of February, March and April.  Builders tapped the brakes on new home production and pulled fewer permits for new homes in May in response to an expected lull in buyer demand following the end of the tax credits.

Unfortunately, though, all the negative news about declining housing starts obscured some important indicators elsewhere in the marketplace last week.

For example, new applications for mortgages to purchase homes, which had been falling for the past six weeks because of the phaseouts of the credits, took a big jump last week -- up by 17.4% in raw numbers over the week before.

Home prices also appear to be headed in a positive direction in many parts of the country. The latest survey found values trending upward in 155 of the 384 metropolitan areas surveyed, including some of the markets hit hard by the bust and recession.

California markets are especially encouraging with price gains in 24 of 28 metropolitan areas. Listing prices were higher in major markets: Up 2.4% in San Francisco, 1.4% in Dallas, and 1.2% in metropolitan Washington DC.

Keep your eye on ALL the market directional signals month to month, not just the ones that draw the big headlines.