Housing Market Recovery Accelerating, Now 47 Percent Back to Normal

Not only is the housing market closer to normal than at any other point since the crisis, the recovery is also accelerating.
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Each month, Trulia's Housing Barometer charts how quickly the housing market is moving back to "normal." We summarize three key housing market indicators: construction starts (Census), existing-home sales (NAR), and the delinquency + foreclosure rate (LPS First Look). For each indicator, we compare this month's data to (1) how bad the numbers got at their worst and (2) their pre-bubble "normal" levels.

In October 2012, all three housing measures improved: construction starts increased again, existing-home sales rose, and the delinquency + foreclosure rate dropped considerably. Even though construction and sales declined month-over-month in the northeast region, stronger activity in the rest of the country outweighed the impact of Hurricane Sandy.
  • Construction starts rose from last month's high. Starts in October were at an 894,000 annualized rate, up 4 percent month-over-month after a big jump in September and up 42 percent year-over-year. Nationally, construction starts are 41 percent of the way back to normal.
  • Existing-home sales recovered in October. After slipping in September, existing home sales rose 2 percent month-over-month to 4.79 million in October and are now just a bit below their post-crisis high of 4.83 million in August. Sales are 59 percent back to normal-more than halfway.
  • The delinquency + foreclosure rate dropped to a post-crisis low. In October, 10.64 percent of mortgages were delinquent or in foreclosure, down sharply from 11.27 percent in September and from 11.88 percent in October 2011. The combined delinquency + foreclosure rate is at its lowest level in four years and is 41 percent back to normal.

Averaging these three back-to-normal percentages together, the housing market is now 47 percent of the way back to normal -- compared with 25 percent in October 2011. In the past three months, Trulia's Housing Barometer has risen from 34 percent to 47 percent, which is the largest quarterly increase since we started tracking the recovery 18 months ago. Not only is the housing market closer to normal than at any other point since the crisis, the recovery is also accelerating.

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