PropertyREI’s Housing Market Dashboard shows the U.S. housing marketing recovery has entered a new phase as inventory expands and housing prices continue to rise.
Each month we will be taking a look at several housing market key performance indicators (KPI’s) to update our readers on how the housing recovery is trending. We will be analyzing the following KPI’s:
- Existing home sales (NAR)
- New construction starts (Census)
- Distressed home sales, foreclosures plus short sales (NAR)
- Housing Inventory (NAR)
Let’s jump into the data indicators.
- Existing homes have remained above year-ago rates for 25 straight months. Total existing sales jumped in July to a seasonally adjusted annual rate of 5.39 million. That represents a 17% year-over-year spike over the 4.60 million unit pace in July 2012.
- New construction starts missed expectations. New construction housing starts in July were at a seasonally adjusted annual rate of 896,000, which is up 6% from June and 21% year-over-year. However, July came in below economists’ forecasts of a seasonally adjusted annual rate of 900,000 new housing units. Year to date, singly-family starts rose 15%, and multi-family shot up 34% over last year’s level. Below is a chart of new housing starts since January 2009:
- Distressed home sales made up 15% of July sales. This figure represents a significant improvement over last July, when distressed home sales accounted for 24% of all sales. Of the 15% in distressed sales in July, 9% were foreclosures, and 6% were short sales.
- Total housing inventory in July dropped 5% to 2.28 million homes being offered for sale. Nationally, the number of homes for sale in July stood 5% below last year levels. The current stock of existing homes for sale represents 5.1 months of supply, compared to the same time last year when there was 6.3 months.
Overall, the tightening of housing inventory levels is a positive indicator as rising prices encourage potential sellers to list their homes for sale. In fact, the average selling price for all housing types rose 14% in July to $213,500 from year-ago rates. As a result, new and well-priced listings move off the shelf rather quickly – the National Association of Realtors reported that 45% of homes sold in July were on the market for less than a month as buyers step in to a buy a home before further increases in the price.
In some submarkets, NAR reports that housing demand is high enough that many regional markets are unusually tight: Oakland, California, 20 days of supply; Denver, 31 days; and Seattle, 36 days.
In addition, even though new construct starts missed economist’s expectations, the fundamentals for housing remain promising. In July, permits for new home construction jumped 3% to a 943,000 unit pace. With permits exceeding starts, economists expect construction to continue rising and contribute further to economic growth.
From an investors standpoint, with rising prices and demand, now is a good time to buy an investment property. Using a rental property analysis tool like this can easily help you analyze a property’s cash flow and return on investment.
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