Tuesday, August 21, 2012

2012: The Year of the Housing Recovery

Here are some highlights from yesterday's RE/MAX National Housing Report for July, based on Multiple Listing Service housing data in approximately 54 metropolitan areas:

1. July home sales were 10.3% higher than sales last July and year-over-year home sales have now risen for 13 consecutive months


2. The median sales price of homes sold in July was $169,000, a 3.7% increase over the $162,970 median price of July 2011, and the sixth month in a row with year-over-year increases

3. For homes sold in July, the average Days on Market (days between listing with MLS and when a sales contract is signed) was 82. This was a drop of 2 days from the average in June and 6 days from July 2011.  The Days on Market average continues to fall in many markets due to low inventory.

4. The inventory of homes-for-sale fell 5.4% from June and 26.8% from July 2011. Inventories have now fallen for 25 consecutive months. A shrinking inventory is helping home prices rise, but may also be limiting sales. Given the current rate of sales, the average Months Supply is now 5.3, about two months lower than the 7.2 average in July 2011. Very low Months Supply exist in San Francisco (1.2), Los Angeles (1.8), Denver (2.4), Orlando (2.5), Phoenix and Miami (3.1). 

MP: RE/MAX points out that the low inventory levels of existing-homes are becoming a challenge to the recovering market and may be holding back sales.  But with rising home prices, many of the previously reluctant sellers and those with low or negative equity may now be increasingly willing to put their homes on the market, which could ease the low inventory issue.  Further, the 29.5% increase in July building permits and the 21.5% increase in July housing starts (data here) will add new housing inventory going forward, and could also help address the low housing inventory levels. 

The increases in July home sales and median sales prices reported by RE/MAX at the national level are being confirmed by recent housing reports coming from many metro and state areas, here's a sample:

St. Louis: Home sales increased 25% in July.

Wisconsin:  Home sales increased 17.3% in July, which was the 13th straight month of a double-digit sales gain. The median price increased by 2.1% and was the 5th consecutive monthly increase. 

Austin, Texas -- Central Texas home sales rose 20 percent in July, the 14th straight month of year-over-year increases. The median sales price increased by 9 percent to $214,000 and marked the sixth straight month the median increased compared with the same month last year.
 
California:  Home sales increased 14% in July and median sales price by +11.5%.

Minneapolis-St. Paul: July homes sales up by 14.6% vs. last year and 58% vs. two years ago.  Median sales price increased by 14.3% to a four-year high for July. Pending home sales in July were 24.3% higher than last year, and 65% higher than July 2010.  

Houston:  Home sales increased in July by 27%, while the median price increased 6.3% to a new record high.  

Bottom Line: RE/MAX is saying that "2012 has become the year of the housing recovery," and the housing sales data so far this year and for July supports that statement: multiple months of rising home sales and median prices, faster marketing time, increases in pending sales, and low inventory levels.  The National Association of Realtors reports on existing-home sales for July tomorrow, Census report on new home sales in July on Thursday, and the Case-Shiller report on home prices comes out next Tuesday, so we'll have lots more housing data over the next week to further assess the strength of the U.S. housing recovery.  

10 Comments:

At 8/21/2012 11:05 AM, Blogger Jon Murphy said...

It is important to remember that the housing market is coming off some very deep lows. Activity (both buying and selling) will remain well below the pre-recession level for quite some time.

All that being said, these are certainly steps in the right direction and a positive sign for an industry that has been beleaguered for over 7 years now.

 
At 8/21/2012 11:22 AM, Blogger Scott Drum said...

2012 might be the year of the housing recovery in the same sense that 2009 was the year of recession recovery.

 
At 8/21/2012 1:57 PM, Blogger bart said...

The weekly Dataquick indexes continue to show that a peak has passed.

The sales index is down over 8% from the recent peak, on an annual change rate basis.

 
At 8/21/2012 5:30 PM, Blogger juandos said...

Housing recovery?

Well maybe...

Initial Claims Rise, Housing Starts Drops, NSA Housing Permits At Three Month Low

 
At 8/21/2012 6:11 PM, Blogger Jon Murphy said...

Juandos,

Regarding Zero Hedge's numbers, I think some additional research is in order.

Yes, Housing Starts dropped and NSA permits fell. But they tend to do this around this time of year. It's a seasonal trend.

Permits are 40.5% above July 2011.

Housing Starts are 24.5% above last year.

Now, I'm not saying Zero Hedge is wrong. Just that he needs to look at the data rather than reporting a knee-jerk number.

 
At 8/21/2012 6:23 PM, Blogger Jon Murphy said...

Excuse me, I had an extra number in there:

Permits in July were 37.3% above July 2011 not 40.5%.

Sorry about that.

 
At 8/21/2012 6:28 PM, Blogger juandos said...

"Yes, Housing Starts dropped and NSA permits fell. But they tend to do this around this time of year. It's a seasonal trend"...

Maybe where you live jm its the trend...

Normally this time of year in the St. Louis, Mo area is the best time of the year to build...

Weather is better, lumber stocks are easier and somewhat cheaper to come by. and there used to be lots of college kids ready to get that last month's worth of paychecks before heading back to school...

 
At 8/21/2012 6:30 PM, Blogger Jon Murphy said...

Maybe where you live jm its the trend...

Actually, no, nationally.

Weather is better, lumber stocks are easier and somewhat cheaper to come by. and there used to be lots of college kids ready to get that last month's worth of paychecks before heading back to school...

True, but that speaks more towards construction already in progress, not Starts. With the exception of the South region and some Mid-Western and Western states, it gets too cold to build in the late fall and winter. You don't want to start building a project, only to put it on hold for six months.

 
At 8/21/2012 6:46 PM, Blogger Jon Murphy said...

Spoiler Alert, folks:

Economic activity slows down during the summer months. This is seen across industries. Why? People go on vacation. It's really that simple.

The point is: If you are looking at data and it drops during the summer months, that by itself is not a sign of overall slowdown.

 
At 8/21/2012 9:04 PM, Blogger VangelV said...

It is important to remember that the housing market is coming off some very deep lows. Activity (both buying and selling) will remain well below the pre-recession level for quite some time.

What is also important is the election year financial 'fixes' that keep rates lower than they should be and allow people to buy homes with 3% down again at a time when inventory is held off the market. Let the markets work as they should and housing would fall in real terms until a true clearing price level is reached.

 

Post a Comment

Links to this post:

Create a Link

<< Home