An excellent case can be made for a strong 2012 recovery in the real estate market. According the National Association of Realtors (NAR), in September there were 3.48 million homes listed for sale. This marks the lowest inventory of homes for sale in the month of September since 2005.
This reduced supply coupled with increasing household formation, a huge pool of deferred renters and buyers (nearly 2 million above the long term average), and record levels of affordability all point to increased prices going forward.
These points seem to be a factor behind a 31% increase in the homebuilder exchange traded fund XHB since the beginning of the month. The broader market looks to be picking up on these signals.
Here are a few charts from Harvest Capital Strategies which illustrate the case.
