Both sales and prices are on the rise from all of the data we currently have.
National median home prices have grown by 2.3 percent for the month of July. When the NAR (National Association of Realtors) breaks down the numbers, we see an increase of 2.1 percent for SFR (single family residences) and an increase of 4.3 percent on existing condominiums and co-ops.
We aren’t just seeing these gains in certain areas; all regions are posting gains in existing-home sales for the month.
Seeing the median home price rise by 9.4 percent over July of 2011 is big. The median home price (nationally) is now $187,300. The NAHB (National Association of Home Builders) reports, “The last time there were five back-to-back increases from a year earlier was in January to May of 2006. The July gain was the strongest since January 2006 when the median price rose 10.2 percent from a year earlier.’
The current Case-Shiller Home Price Indices represents data through June of 2012. It shows that ALL THREE headline composites ended the second quarter of 2012 with positive annual growth rates for the first time since the summer of 2010.
“All 20 of the cities saw average home prices rise in June over May and all were by at least 1.0%. Detroit was up the most, 6.0%, and Charlotte the least at, 1.0%. “
One of the reasons for this price increase is a lack of inventory. Inventory of single-family homes is below 2.5 million units; this is the lowest level since 2004. This would indicate it’s a sellers’ market. The standard is that over 4 million units of inventory for sale is considered a “buyers’ market” and less than 4 million is considered a “sellers’ market”. “However, negative equity remains a factor constraining supply in some markets, since many underwater homeowners cannot come up with the cash to cover the difference between their outstanding mortgage balance and the current market value of their homes. Many positive Equity homeowners are also keeping their houses off the market, waiting for price increases to boost their selling profits.” Says David Stiff, Chief Economist for Fiserv.
As we continue to see with this “recovery” not all sectors post gains at the same time. The NAHB reported a drop in new housing starts for July. “Nationwide housing production edged down 1.1 percent to a seasonally adjusted annual rate of 746,000 units in July according to newly released figures from HUD and US Census Bureau.” But on the other hand we saw a rise in the number of permits builders pulled. There was a 6.8% increase in permits pulled for the month of July. Chief Economist David Crowe for the NAHB reports that, “our latest surveys confirm builders’ increased confidence about further buyer demand… is reflected in today’s permit numbers. Increasingly, housing is re-emerging as a traditional and much needed source of strength in local economies as builders are able to put their crews back to work. But two things are slowing the process considerably, the challenges that builders continue to face in accessing credit for viable new projects and the difficulty of obtaining accurate appraisals on new homes.”
One of the other interesting trends we see right now has been a plunge in homeownership rates, in fact they are the lowest in almost 50 years at 62.1%. Homeownership rates are defined by the percentage of households who own a home and are not 90 days or more delinquent on their mortgage.
According to a survey done by John Burns Real Estate Consulting of 20,000 consumers, the American dream of homeownership is as strong as ever and will continue to once again grow. Additionally, in states where the foreclosure process has been better managed, we are seeing foreclosed homeowners becoming home buyers again after the 3-year waiting period required by most mortgage programs.