Intero Insider: Positive Housing News with High Impact

In the wake of two pieces of positive news on housing last week, there was a loud chorus of commentators simultaneously asking: "Is this the big sign we've been waiting for?"

"Could it be? The housing recovery is fully grown?"

News item #1: Home values increase in Case-Shiller's index

Sure, we've already seen an increase in values in some of the other indexes that track this data. The National Association of Realtors reported a 7.9% increase year-over-year in the median home price in May. And the FHFA house price index, which is a Federal government-generated number, showed a 2.7% increase year-over-year in May.

This one from Case-Shiller is kind of a big deal, though, because while industry reports like the one from NAR are constantly criticized for being overly optimistic, the Case-Shiller index has always suffered criticism for being too lagging and too negative.

The fact that the latest Case-Shiller index showed a 0.7% increase in home prices for April from the previous month is big news. The index showed positive gains in 19 of the 20 cities it tracks. Pretty impressive!

News item #2: Sales of new single-family homes jumped in May

Sales of new single-family homes were up 8% in May from April and up 20% from the same month a year ago, according to new data released from the Commerce Department.

Again, this is an agency from outside the housing industry reporting positive gains, which tends to give the news added weight among skeptics.

What are we to make of these statistics?

As I've been saying a lot lately, all of these national numbers are pretty much meaningless when it comes to the individual decisions that buyers and sellers make. Those decisions are based much more on the local market and the individual household situation (i.e., Do we need to sell? Do we need to relocate? etc.).

But on the national stage, positive statistics do help to paint the economic picture for lawmakers, which affects the conversation that takes place in the media. That in turn affects market psychology a bit. When you're constantly hearing on the news that the market is in trouble, you tend to be a bit nervous about playing. By contrast, if you're hearing the market is much improved and all the signs point to more improvement to come, it can affect your confidence level – this time, in a good way.