Bernanke hedged this optimism acknowledging that despite record low mortgage rates, lenders continue to enforce tight credit standards even for potential borrowers with good credit scores. Lenders complain about uncertain economic conditions and the stiffening regulatory environment. Bernanke also explained that the housing recovery was slower than normal because potential buyers of new homes cannot sell their current homes because they are underwater on their mortgages. Despite the low inventory of existing homes for sale, Bernanke says that there's a "a substantial overhang of vacant homes, either for sale or in the foreclosure pipeline that continue to hold down house prices and reduce the need for new construction." The National Association of Home Builders recently reported that their Housing Market Index rose a solid five points in November to 46. This was the seventh consecutive monthly gain to the highest level since May 2006, which is a month before the bubble in home prices popped. Builders reported increased demand for new single family homes as inventories of foreclosed and distressed properties decline. Buyers were said to be looking to take advantage of record low mortgage rates. Keep in mind that a reading of 46 for NAHB HMI is still below the neutral reading of 50, and difficult appraisals and tight credit standards for both builders and new home buyers remains quite tight. The chart below shows single family housing starts lag the HMI significantly. Housing Starts rose 3.6% in October to an annual rate of 894,000 units, but the important Single Family Starts fell 0.2% to 594,000 units, which does not correlate with the five-point rise of the NAHB Housing Market Index to 46 in November. Building permits, the leading indicator for future starts, is also not confirming the NAHB HMI with a decline of 2.7% to 866,000 units annually. The S&P Case/Shiller 20-City Home Price Index rose 0.3% month over month in September, the sixth consecutive monthly rise, and rose 3.0% year over year. The index is up 9.0% from its March 2012 low, but is still down 29.0% since the housing bubble popped in June/July 2006.
Reading the Table
OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine. VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy. Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last twelve months. Stocks with a black number increased by that percentage.