Skip to Content
Investing Specialists

Recent Housing Data Must Have Bernanke Saying He Told Us So

Housing starts had their second-best showing of the recovery, which bodes well for the months ahead, says Morningstar's Bob Johnson.

Mentioned: , , , , , , ,

As regular readers of this column know, I have not been a big fan of quantitative easing. I feared that these programs weren't doing much more than inflating commodity prices, which in the end hurt consumers. I will admit that the easing has helped lift both bond and equity prices. Unfortunately, many consumers have been loath to spend any of those gains, which are now quite substantial (the S&P 500 is now up 18% for the year and many indexes now exceed levels reached just prior to the recession).

However, I must give credit where credit is due: The programs are finally beginning to move the housing market off of dead center. Recent data suggests that home prices are up more than 3% from a year ago and as much as 9% from lows reached this spring (according to non-seasonally adjusted data from  CoreLogic (CLGX)). New housing starts and existing home sales have both had quite a run. In some cases, housing data has been improving for more than six months in a row, suggesting that just maybe we are building a virtuous cycle of momentum in this heretofore left-for-dead sector. That the economy has done as well as it has without any help from the housing industry is probably one of the lesser-recognized miracles of this recovery.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.