PropertyREI’s December 2013 Housing Market Dashboard shows the U.S. housing market points to positive long-term growth potential.
We look at several housing market key performance indicators (KPI’s) to update our readers on how the housing recovery is doing:
- 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:
1. Existing Home Sales
Existing home sales, which are completed transactions that include single-family, townhomes, condos, and co-ops, increased 1% in December from a downwardly revised November. Total existing sales increased in December to a seasonally adjusted annual rate of 4.87 million up from 4.82 million in November. However, December sales were down 0.6% from a year ago when the pace was 4.90 million units
For all of 2013, sales were 5.09 million, up 9.1% from 2012, the strongest showing since 2006, when existing home sales reached an unsustainably high 6.48 million at the peak of the housing bubble
2. New Construction Starts
New construction housing starts dropped 9.8% in December to a seasonally adjusted annual rate of 999,000 units. Even still, the figure exceeded economists’ forecasts for 975,000 starts in December. The Housing starts rate in December was up 1.6% above last year’s levels.
Despite December’s decline, housing starts for all of 2013 hit 923,400, an 18.3% percent gain from the prior year and the highest annual total since 2007.
3. Distressed Home Sales
Distressed home sales accounted for 14% of December sales. Of the 14% in distressed sales in December, 10% were foreclosures, and 4% were short sales.
4. Housing Inventory
Total housing inventory in December dropped 9.3% to 1.86 million existing homes for sale. Housing inventories fell to a 4.6 month supply, down from a 5.1 month supply in November. Realtors consider a six-month supply to be a balanced housing market.
Closing Thoughts
The latest data on the housing market points to positive long term growth potential. New housing starts in 2013 climbed to the highest annual level since 2007. New building permits, filed by builders ahead of starts, fell 3% in December to an annualized rate of 986,000. But for all of 2013, building permits reached 974,700, also the highest yearly total since 2007.
The national median price for existing homes rose 10% from year-ago levels to $198,900 in December. National home prices finished 2013 up 11.5% for the year, marking the strongest gain since 2005. The tightening of housing inventory to 4.6 months of supply is a positive trend as rising prices encourages more sellers to list their homes for sale and homeowners can regain some positive equity status in the process.
And new and well-priced listings are selling fast. The National Association of Realtors reports that 28% of home sold in December were on the market for less than a month.
Despite a rocky December, which was likely impacted by severe weather, home builders should have good reason for optimism. Indeed, confidence among home builders rose to the highest level in over six years in December, with many optimistic about the sale prospects of single-family homes.
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