November 2015's housing data was positive with the exception of existing house sales (-3.8% Y/Y). The volatile multi family sector remains strong (+21.3% Y/Y; ≈35% of all starts) with rents rising.

Housing prices are increasing steadily as inventories are low (4.6 months supply for SF, 4.8 months for existing homes). Yet, fewer houses are bought by first time buyers (≈32% now vs. ≈40% historically) due to a variety of reasons. Without the return of these first time buyers, it's hard to envision a return of the housing market to "normal."

With global uncertainty, Europe being stuck in slow growth while coping with the Euro and the migrant crises, and China and other countries slowing precipitously, there are numerous negative macro-factors endangering a robust housing recovery:
1) A constrained quantity of well-paying jobs being created;
2) a tepid economy;
3) declining real median annual household incomes;
4) strict home loan lending standards – though loosening with new programs; and
5) slowing world economy; and
6) global uncertainty

Comments on November 2015 housing data:

• November totals were up 10.9% ( to 1.173 million, annual rate) - SF at 768,000, up 7.6% (SAAR) – MF still 35% of total
• Multi family still the driver – rental prices still increasing – single family sales remain relatively weak and has a large impact on wood product prices. This trend will continue for some time as “1st time buyers’ remain on sidelines as weak supply drives prices up for 1st time buyers
• Economic issues - slowing world economy (China GDP slowest in past 6 years). China slowdown plus currency devaluation will drive commodity prices lower, and rekindle deflation concerns around the world.
• Increasing geopolitical risk and continued domestic/Washington gridlock - causes uncertainty which leads to less investment which leads to slower productivity growth, and ultimately slower GDP growth and lower standard of living!
• Job market is improving, albeit slowly, and wage gains remain weak, The real unemployment rate remains high at 10.3%. This equates to about 16 million people who are either unemployed, stopped looking, or working part time because they can’t find full time jobs. This “slack” in the job market will keep wage gains modest for some time.
• Income growth in U.S. remains pathetic – latest Census report shows real incomes fell again in 2014. This suggests to me that housing will remain sub par for some time – many 1st time buyers just can’t enter the market.
• World GDP growth outlook is shaky at best – main problem today is the slowdown in China which has been the major economic engine over the past 5 – 6 years. European growth is expected to be weak while back here in the USA, growth will probably remain below par (~ 2%) for some time.