Where is the Housing Market Headed?

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Where is the U.S. Housing Market Headed?
Source: Wall St. Journal

IMG_7223Signs point to a housing market that may slowly be gaining some balance and entering more normal territory as a variety of recent housing reports paint an improving picture.

Making sense of the story

  • While there was buzz about a potential bubble, Home prices aren’t going up as fast as they were a year ago.
  • Furthermore, according to the Commerce Department, sales of new homes, which have struggled to increase from relatively low levels of a year ago, posted huge gains in May.
  • A key takeaway is that in May, sales of new homes were at their highest levels in six years with a figure of 504,000 sales at a seasonally adjusted annual rate.
  • Also, new home sales are now running 1 percent ahead of last year’s January-through-May level, as the spring-selling season made up for difficult winter conditions in much of the country.
  • However, sales have also been deterred by the fact that builders have been slow to ramp up production. While inventories are still very low, they are up 16 percent from last year.
  • Overall, home prices aren’t rising as briskly as they were last year. And as for the large yearly increases over the past year, they have reflected continued declines in the share of homes selling out of foreclosure.
  • As more supply comes to market, prices are likely to cool down further. It will be a positive sign for the recovery if builders are able to sell more homes and if more traditional owner-occupant buyers dominate the market rather than investors.

Category : Blog

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