From the WSJ:
The house party may just be getting started.
The recovery in housing that began taking hold last year caught most economists by surprise. Even though the overall economy made only middling progress, even though there was still a mess of homeowners underwater on their mortgages and even though banks remained reticent about lending to would-bebuyers, sales and prices picked up.
The welter of housing reports slated forthis week—January new-home sales and December home-price indexes are due on Tuesday, January pending home sales come Wednesday, and January construction spending is out Friday—should reflect further improvement in the sector.
Yet just because housing has gotten better doesn’t mean there isn’t a lot of room for improvement. Take Tuesday’s new-home sales report from the Commerce Department. Economists polled by Dow Jones Newswires estimate a seasonally adjusted 380,000 homes were sold last month, at an annual rate. That would be better than December’s 369,000 or the year-earlier level of 339,000, but stillabout half of the average level of the 1990s.
One problem for housing is that a lot of people, despite wanting to move, have stayed put because they couldn’t stomach the low price their old house would fetch. That has put a freeze on the market, leading real-estate agents around the country to complain about a lack of inventory.
The recent move higher in prices—economists estimate that the Standard & Poor’s/Case-Shiller 20-city index on Tuesday will show a 6.6% increase in December from a year earlier— should shake some of those homeowners off the fence, says Thomas Lawler, an independent housing economist in Leesburg, Va. The busy spring-selling season that will soon get under way should witness the first significant year-over-year increase in prices since 2006.