Usa Housing Market Showing Healthy Recovery
The United States’ housing market is showing good signs of recovery, with both sales and prices rising, according to the National Association of Realtors. The NAR has released figures showing that sales have been rising for over a year and a half, with every month since October 2011 showing better figures that the year before.
Total existing home sales increased by 0.8% to a seasonally adjusted annual rate of 4.98 million in February, from an upward-revised 4.94 million in January, and the February figure is 10.2% higher than February 2012.
NAR’s chief economist, Lawrence Yun, said the conditions for continued housing growth are improving. ‘Job growth in the improving economy and pent up demand are causing both home sales and rental leasing to rise. Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable,’ he said.
Total housing inventory at the end of February rose 9.6%, to reach 1.94 million existing homes available for sale, which represents a 4.7 month supply at the current sales pace, up from 4.3 months in January, which was the lowest supply since May 2005. Listed inventory is 19.2% below a year ago, when there was a 6.4 month supply.
As sales rise, the supply of existing homes available is reduced, so falling supplies indicates a housing market in good economic health, showing that people are both buying and selling existing homes; this contrasts with a market in which only new builds are bought, or only certain types of homes, which can indicate a market driven by investors, or one in which only new buyers are driving growth.
The national median of existing home price for all housing types was $173,600 in February, up 11.6% from February 2012. The last time there were 12 consecutive months of year-on-year price increases was from June 2005 to May 2006, in the years leading up to the subprime crisis of 2007-2008. The February gain is the strongest since November 2005, when it was 12.9% above a year earlier.
While distressed homes, which is to say foreclosures and short sales, accounted for 25% of February sales, up from 23% in January, distressed homes accounted for 34% of sales in February 2012. In February 2013 15% of sales were foreclosures, and 10% were short sales. But the evidence still shows a market where sales and prices are increasing even as foreclosure and short-selling activity falls. In markets where that’s not the case, some of the extra sales are often investors or small buy-to-let landlords buying up distressed housing stock and this activity can make prices rise even as the ‘real’ housing market – that between owner-occupiers – is actually suffering. But these figures paint a picture of a genuine recovery.
First time buyers accounted for 30% of purchases in February, down 2% from the previous year but still a high number. And the number of investors purchasing homes rose by 4% from January to February, reaching 24%. However, single family sales rose by 8.7% from February 2012, again indicating strong participation in the improvement by owner-occupiers.
While the housing market is helped by a rising economy in the US, it’s also helping to drive the recovery, as Mr. Yun explains: ‘The extra consumer spending arising from growth in housing wealth is expected to be $70bn to $110bn this year.’