Rental rates one strong sign in weak housing market
Rental rates continue to be strong as the cost of homes continues to fall in the U.S.
Adriene Hill: And, we've got new housing numbers to report this morning. The S&P Case-Schiller home price index shows that home prices fell in most major cities in October. It's the second month of declines, after a few months of more positive news.
For more, we've got Juli Niemann, from Smith, Moore and Company in St.Louis. She joins us live every Tuesday. Good morning Juli.
Juli Niemann: Morning Adriene.
Hill: What do you make of the drop in housing prices?
Niemann: There were very few bright spots. Areas within cities is what saw, and then a few areas of the south and the Midwest -- but again, it was very, very spotty. And the problem is, October is the tail end of homebuying season.
So the coming months' news is not going to be cheery at all -- no one moves in the winter unless you're forced to. Moreover, we currently have over about 3.3 million houses for sale. That's an eight month inventory to work off of; six month supply on new homes.
And the biggest reasons -- you've got 20 percent down required now -- and you can do that only for the lower priced homes. Debt levels are still way too high for American consumers. And unemployment is still near 9 percent.
Hill: Now you mentioned a few regional bright spotes -- any other good looking signs in the housing market right now?
Niemann: The one tick-up happens to be in rentals, and rental rates are up very nicely. Speculators are buying and rehabing smaller houses now, and moving those into the rental markets. There's good demand there -- multi-family units, apartments -- good construction going on there. Permits are up about 37 percent over the last 11 months.
This is really going to be our long-term trend now, because incomes are not growing, consumers debt levels are still very high, and there's no turn in sight. But the good news is, it's not getting perceptively worse. But the American Dream is not buying a house now, it's getting out -- getting out of debt and getting out of mom and dad's basement.
Hill: Julie Niemann from Smith, Moore and Company, thanks so much.
Niemann: You bet.