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Has Housing Hit Bottom?

NEW YORK ( TheStreet) -- With unemployment still rising, variable mortgage resets due over the next two to three years on hundreds of thousands of houses with mortgage principal greater than current market values, can we actually be at a bottom?

There have been recent proclamations that a housing bottom has been reached. For example, Jim Cramer declared that the housing bottom occurred on June 30, 2009. There are some data points in sales volume and national price averages to make the case that a bottom may be here, or at least close at hand.

There is a glimmer of hope from new-home sales volumes. In the graph below, we see the remarkably reproducible seasonal sales-volume cycles since 1999. In the first half of 2009, the seasonal rise was stronger than 2008, although weaker than any other year shown.

What is noteworthy about 2009 is that there was a higher volume in June than April. That happened only once before in this 11-year period (2002). What happens in the next three months (July through September) will be go a long way toward determining whether or not the four-year decline in number of new-home sales may have been reversed.

New-Home Sales
chart
Source: U.S. Census Bureau

The U.S. Census Bureau also reports housing starts each month. The average annual rate for the first six months of 2009 is 530,000 compared to 582,000 for June. It does not bode well for a bottom when the number of housing starts is 35% to 40% higher than the number of sales (372,000 average annual rate for six months and 432,000 for June). Something just doesn't add up here.

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