Photo: Michael Patrick
Despite ongoing inventory shortages and faster price growth, existing-home sales in the US rose for the second month in a row in April 2016.
The latest figures from the National Association of Realtors show that completed transactions rose 1.7 per cent to 5.45 million in April, up from 5.36 million in March 2016 and 6 per cent higher than April 2015.
Lawrence Yun, NAR chief economist, says April’s sales increase signals slowly building momentum for the housing market this spring.
“Primarily driven by a convincing jump in the Midwest, where home prices are most affordable, sales activity overall was at a healthy pace last month as very low mortgage rates and modest seasonal inventory gains encouraged more households to search for and close on a home,” he explains. “Except for in the West – where supply shortages and stark price growth are hampering buyers the most – sales are meaningfully higher than a year ago in much of the country.”
The median existing-home price2 for all housing types in April was $232,500, up 6.3 per cent from April 2015 ($218,700). April’s price increase marks the 50th consecutive month of year-over-year growth.
Total housing inventory at the end of April increased 9.2 per cent to 2.14 million existing homes available for sale, but is still 3.6 per cent lower than a year ago (2.22 million). Unsold inventory is at a 4.7-month supply at the current sales pace, up from 4.4 months in March.
“The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow,” adds Yun.
US home sales on course for best year since 2006
16th May 2016
House prices may be rising and supply may be low, but US home sales are on course for their best year since 2006.
According to the National Association of Realtors, monthly existing-home sales were uneven in the first quarter but still came in at a seasonally adjusted annual rate slightly higher (5.29 million) than last year’s overall annual pace (5.26 million).
This is largely because demand has mostly remained strong, especially in the top job-producing metro areas, buoyed by strong employment conditions (14 million jobs have been created since 2010) and mortgage rates at near three-year lows.
“The housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fueled by the grossly inadequate number of new single-family homes being constructed,” says Lawrence Yun, chief economist of the National Association of Realtors. “The good news is that pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer.”
Yun forecasts existing sales to finish 2016 at a pace of around 5.40 million – the best year since 2006 (6.48 million). After accelerating to 6.8 per cent in 2015, the national median existing-home price is forecast slightly moderate to between 4 and 5 per cent this year.
“Spectacularly low mortgage rates mean today’s prospective homebuyers are the luckiest in a generation but the unluckiest in actually becoming homeowners because of the roadblocks hampering their ability to buy,” adds Yun, who notes that first-time buyers are the missing link in the chain for a full housing recovery.
US existing home sales spring forward in March
25th April 2016
Existing home sales in the USA sprung forward in March 2016, according to the National Association of Realtors, reversing a decline in February.
Total existing home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – jumped 5.1 per cent to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February. Sales rose in all four major regions last month and are up modestly (1.5 per cent) from March 2015.
“Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest – overcame depressed inventory levels and steady price growth to close on a home,” explains Lawrence Yun, NAR chief economist. “Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.”
Indeed, March saw prices rise year-on-year for the 49th month in a row, taking the median existing home price up to $222,700.
Housing inventory at the end of March rose slightly (by 5.9 percent), but remains 1.5 per cent lower than a year ago.
“The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,” adds Yun. “Additionally, a segment of would-be buyers at the upper end of the market appear to have been spooked by January’s stock market correction.”
The share of activity made up by first-time buyers was 30 per cent in March, unchanged both from February and a year ago.
“With rents steadily rising and average fixed rates well below 4 per cent, qualified first-time buyers should be more active participants than what they are right now,” notes Yun. “Unfortunately, the same underlying deterrents impacting their ability to buy haven’t subsided so far in 2016. Affordability and the low availability of starter homes is still a major barrier for them in most markets.”
US home sales enjoy best year since 2006
25th January 2016
US home sales have just posted their best year since 2006, as buyers climbed onto the housing ladder before the end of 2015.
Total existing-home sales climbed 14.7 per cent to a seasonally adjusted annual rate of 5.46 million in December from 4.76 million in November, according to the National Association of Realtors. After last month’s turnaround (the largest monthly increase ever recorded), sales are now 7.7 per cent above a year ago and are now at their best annual level since 2006 (6.48 million).
Lawrence Yun, NAR chief economist, welcomed the “robust” rebound in activity, with all four major regions seeing large increases.
“Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s 7 per cent increase in sales,” he comments. “In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas.”
One of the factors spurring buyers to complete sales in December was the prospect of rising mortgage rates, as buyers took advantage of the warm end-of-year weather to beat the rise in costs. Indeed, the median existing-home price for all housing types in December was $224,100, up 7.6 per cent from December 2014 ($208,200). Last month’s price increase marks the 46th consecutive month of year-over-year gains.
A change in mortgage systems also contributed to December’s rise, as the US introduced the “Know Before Your Owe” rules, which replace four disclosure forms with two new ones in an attempt to ensure that buyers are borrowing what they an afford.
Delayed closings resulting from the rollout of the initiative in November led to more sales being closed in December, although Yun notes “the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015”.
First-time buyers accounted for 32 per cent of sales in December, up from 30 per cent in November and 29 per cent a year ago, but the annual share of first-timers is still at its lowest level in almost 30 years, warns the NAR.
“First-time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages,” comments Yun. “While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters’ overwhelming interest to own a home should lead to a modest uptick in first-time buyer activity in 2016.”
All-cash sales, which usually indicate international purchases, made up 24 per cent of transactions in December, down from 27 per cent in November and 26 per cent a year ago, as rising costs impacted the potential yields available to investors. Nonetheless, US property regularly ranked as the most popular destination on TheMoveChannel.com among international buyers.Google+