PropertyREI’s September 2013 Housing Market Dashboard shows the U.S. housing market recovery remains on a cautiously optimistic trajectory.
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 doing. 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 look at the data.
- Existing home sales increased in August and surpassed the highest point in over six years. Existing homes have climbed above year-ago rates for 26 straight months now. Total existing sales increased in August to a seasonally adjusted annual rate of 5.48 million from 5.39 million in July. That reflects a 13% year-over-year improvement over the 4.84 million pace in August of last year.
- New construction starts continue to miss expectations. New construction housing starts in August were off to a seasonally adjusted annual pace of 891,000 units, falling below the 917,000 rate economists had expected. Even still, new housing starts came in 19% above last year’s levels. Year to date, singly-family starts were up 15% to 628,000 units. The multi-family sector, however, continues to drag on the housing market. Starts for multi-family homes dropped 11.1% to a 263,000 unit pace.
- Distressed home sales accounted for 12% of August sales, down from 15% in July. This figure represents a significant improvement over last August, when distressed home sales accounted for 23% of all sales. Of the 12% in distressed sales in August, 8% were foreclosures, and 4% were short sales.
- Total housing inventory in August increased 0.4% to 2.25 million homes for sale. The current supply of existing homes for sale represents 4.9 months of supply, down from 5.0 months of supply last month.
Overall, the housing market is showing some signs of positive growth. The tightening of housing inventory levels to 4.9 months of supply is a positive indicator as rising prices encourages more sellers to list their homes for sale. The national median selling price for existing homes rose 15% from year-ago levels to $212,100. And new and well-priced listings are selling quickly. The National Association of Realtors reports that 43% of home sales in August were on the market for less than 30 days.
On the other hand, building permits, an indicator of future housing starts, declined 3.8% in August to a 918,000 rate suggesting a slowdown in housing construction in the near term. The drop in starts and permits suggests higher mortgage rates and tightening credit conditions could be making developers cautious about investing in new projects. Developers have also been complaining about labor shortages and expensive building materials. Even still, with permits exceeding starts, economists expect construction to continue rising and contributing to economic growth.
From an investment perspective, with rising prices and increasing demand, now is a good time to invest in real estate and buy an investment property. Using an investment property analysis tool like PropertyREI can easily help you analyze a prospective property’s cash flow and return on investment.
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