Existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020, according to the National Association of Realtors® (NAR). Month-over-month sales rose in all four major U.S. regions – but they also all saw year-over-year declines.
February median existing home prices fell for the first time in 131 months– almost eleven years – according to NAR. The median existing-home price for all housing types was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – climbed 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February. Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).
Total housing inventory at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.
Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022. Still, most homes (57%) sold in February were on the market for less than a month.
National Association of Homebuilders (NAHB) Chief Economist Robert Dietz recently provided this housing industry overview in the bi-weekly e-newsletter Eye on the Economy.
Housing data for the end of 2022 illustrate a market continuing to weaken because of low housing affordability, largely as a result of elevated mortgage interest rates. At the start of 2023, the average 30-year fixed mortgage rate is near 6.5%, down from a near 20-year high of 7.1% in early November.
However, forecasters expect the Federal Reserve will end its path of rate increases at the end of the first quarter. This should lead to sustainable declines for mortgage rates in the second half of 2023 and into 2024, enough to spur a rebound for single-family construction.
And more construction is needed over the long term: A new NAHB study estimates the housing market is underbuilt by 1.5 million homes. (more…)
Homes reached record prices in early 2022 – so is the current market a housing recession or just a market correction?
Here are some extracts from an article Market at the Crossroads on the Florida Realtors website, with my comments and links to recent articles at the end.
Is there a housing slowdown?
There is widespread consensus that the housing market has experienced a drastic drop-off in activity since its pandemic-prompted heights.
The housing market is “not like the volatile stock market, always going up and down; the housing market moves at a different, slower pace. “The market simply could not, and was never expected to, grow at that pace indefinitely,” Neda Navab, president of brokerage operations at real estate company Compass said. “Whether this trend will continue long enough for the market to enter a true ‘recession,’ or if this is simply the start of an expected ‘correction’ to historic norms, still remains to be seen.”
According to this report from Keeping Current Matters the major reason for the housing crash 15 years ago was a tsunami of foreclosures. With much stricter mortgage standards and a historic level of homeowner equity, the fear of massive foreclosures impacting today’s market is not realistic.
Homeownership has become a major element in achieving the American Dream. A recent report from the National Association of Realtors (NAR) finds that over 86% of buyers agree homeownership is still the American Dream.
Prior to the 1950s, less than half of the country owned their own home. However, after World War II, many returning veterans used the benefits afforded by the GI Bill to purchase a home. Since then, the percentage of homeowners throughout the country has increased to the current rate of 65.5%. That strong desire for homeownership has kept home values appreciating ever since. The graph below tracks home price appreciation since the end of World War II:
One of the major story lines over the last year is how well the residential real estate market performed, with home prices are skyrocketing this year.
This article from Keeping Current Matters shows that prices have been rising across the country and at all price points, while expert forecasts call for price increases of 5-8% in 2022. The article concludes “If you’re thinking of buying, consider buying now as prices are forecast to continue increasing through at least next year.”
Here are the latest percentages showing the year-over-year increase in home price appreciation:
According to data gathered by money.co.uk (no relation to money.com, but we should probably be friends or something), the country with the highest property price increase from 2010 to 2020 was Israel, where there was a staggering 346% rise in costs per square meter.
Switzerland and Germany come next, with increases of 166% and 162%, followed by the United States at 153%. Hungary, Slovakia, France, Portugal, Japan and the United Kingdom round out the rest of the top 10, all with average home price increases of at least 75%.
Today’s market problems – a shortage of affordable housing, historically tight inventory of homes for sale and rising prices – weren’t caused by the latest pandemic-caused economic slowdown. It goes back to the Great Recession.
Experts say the U.S. housing market was already being roiled by forces fueling the current housing-price explosion even before the pandemic.
Matthew Murphy at New York University’s Furman Center for Real Estate & Urban Policy said supply shortages were evident heading into the pandemic, adding that “the context here to this current housing moment is that we were still recovering from the 2008-2009 foreclosure crisis.”
Meanwhile, the National Association of Realtors® has been pointing to an “underbuilding gap” of between 5.5 and 6.8 million housing units since 2001. (more…)
Manhattan real estate prices reached an all-time high in the second quarter, as buyers returned to the city and boosted demand for the largest, most expensive apartments, according to new reports.
The median resale price for Manhattan apartments hit $999,000 in the second quarter — the highest on record, according to a report from Douglas Elliman and Miller Samuel. Average sale prices rose 12% in the quarter, topping $1.9 million.
The price jumps and shrinking inventory suggest the Manhattan real estate rebound continues to gain momentum, as more families look to trade up to larger apartments and buyers look to take advantage of lower prices and low mortgage rates.
“It’s a sign of the frenzy and intensity of the market,” said Jonathan Miller, CEO of real estate appraisal firm Miller Samuel. “It’s rebounding much faster than most participants expected.” (more…)
The coronavirus pandemic raised the temperature considerably on the nation’s housing market. The past year has been marked by soaring prices, logic-defying offers over asking price, and steep competition as sellers have been hesitant to put their homes up for sale.
But the heart-pumping, bank account–depleting housing market frenzy could die down—at least a little—in the coming months as more sellers list their properties and inventory slowly increases. About 10% of current homeowners plan to put their homes on the market this year—and more than half are more affordably priced, according to an exclusive survey conducted by realtor.com®. An additional 16% expect to list their properties within the next two to three years.
Typically, only about 8% of homeowners put their homes up for sale a year. This is about a 25% anticipated increase, which translates into about 1.5 million more homes. The increase may be due to folks holding off on selling their homes during the worst of the coronavirus pandemic.
“There is a brighter light at the end of the tunnel for many weary buyers,” says Realtor.com Senior Economist George Ratiu.“In a market that right now only has close to half a million listings, a big boost in inventory can mean more choices for buyers and potentially a slowdown in price growth,” says Ratiu. He was quick to add that prices won’t drop, but the double-digit growth may taper off. “It’s signaling a return to normal for the economy and the housing market.”
The U.S. housing market needs nearly 4 million single-family homes to meet the nation’s demand, according to a new analysis from Freddie Mac. The 3.8 million shortfall marks a 52% increase in the housing shortage since 2018.
“This is what you get when you underbuild for 10 years,” says Sam Khater, Freddie Mac’s chief economist. “We should have almost four million more housing units if we had kept up with demand the last few years.”
Lawrence Yun, chief economist of the National Association of REALTORS®, has been among real estate economists leading the calls over the last few years for greater inventory and more homebuilding to meet demand. “We need to build more homes,” Yun told NPR, adding that since the housing crisis more than a decade ago, homebuilders have been building too few homes.
The housing shortage mixed with strong buyer demand since the pandemic is prompting home prices to rise rapidly. The median existing-home price for all housing types in February was $313,000, up 15.8% compared to a year earlier, according to the National Association of REALTORS®.
But there is increasing concern among consumers that housing is experiencing a price bubble – and that the bubble may be ready to burst.
Google reported last week that the search question “When is the housing market going to crash?” had spiked 2,450% in the past month. “Why is the market so hot?” searches had doubled in just a week. (more…)
“The national average of home prices rose 14.4% year-over-year to $336,200 in February – the largest increase since July 2013, according to the latest report from Redfin. As proof of the impact of the country’s low inventory and high cost of building materials, new listings fell 16% – the second-largest decline on record since Redfin’s data began in 2012, only passed by the drop in April 2020.
Mortgage rates have also jumped to north of 3%; at its current pace, the Mortgage Bankers Association is forecasting rates will reach nearly 3.5% by the end of 2021. New home applications are down as well, as builders are still struggling with smaller-than-normal crews and expensive materials that are hard to procure. And even with March well underway, mortgage applications are still in decline.”
Redfin’s chief economist makes the profound comment that : “It seems like the only move-up buyers who are confident enough to list their homes are those who are relocating to a more affordable area where they’ll have an edge on the local competition.”
I can confirm that as I was talking just yesterday to an agent whose client with a $2 million house won’t list it because “she cannot find anything to buy.”
But to come back to the question in this article: are we in a bubble?(more…)
As I read this New York Times article: Where have all the houses gone? my mind went to Yogi Berra’s line of “it’s deja vu all over again” as I checked my files and discovered that this will be my 5th article with this title – and the first was written in 2013.
Let’s look at the what and the why.
First, the what. This chart shows that inventory has plummeted across the country: