Housing Shortages Plague Market

Housing Shortages Plague Market

Buyer demand is up, but there aren’t enough homes available to buy, according to the National Association of REALTORS®, which blamed a recent drop in home sales on Housing Shortages of for-sale homes.

“Recent price increases are not deterring buyer interest,” notes Lawrence Yun, NAR’s chief economist. “Rather, Housing Shortages are limiting sales, notably in parts of the West.” For example, sales of homes priced under $100,000 in the West have dropped 47 percent from a year ago.

Home owners are not putting their homes on the market at a high enough rate to offset the drop in distressed volumes, CNBC reports. Distressed sales have made up more than one-third of home sales in the past two years, but more recently has only made up about 24 percent of total home sales.

Besides the drop in distressed homes for-sale, many home owners are still continuing to wait out the market to recover more equity in their homes before they try to sell.

Yun says that home builders need to increase construction in order for home sales to recover more and to meet the demand for houses. Housing starts have risen 43 percent compared to a year ago, but levels still are only about half of what is considered normal for the sector.

Source: “Is There a Housing Shortage?” CNBC (Oct. 19, 2012)

Fannie Mae on Housing: The Worst is Behind Us

Fannie Mae on Housing

Fannie Mae economists say they believe home prices “hit bottom” earlier this year and that prices and sales will continue to move up as more consumers enter the housing market.

Economists with the mortgage giant are forecasting about a 9 percent rise in home sales this year, topping out at 4.98 million. They expect home sales to reach 5.19 million next year—a number that hasn’t been reached in years. Fannie Mae is also predicting housing starts to rise: 746,000 this year and 888,000 by 2013.

Still, challenges persist in the housing market’s recovery, Fannie Mae economists note.

“The U.S. fiscal cliff and debt ceiling debate as well as the weakened global economic environment are likely to create the strongest headwinds facing any real improvement this year,” says Doug Duncan, Fannie Mae’s chief economist. “With these issues hanging in the balance, we believe risks remain tilted to the downside. News from the housing sector is more positive, with various indicators showing continued momentum toward a sustainable, long-term recovery.”

Source: “Fannie: Sales Up 9 Percent in 2012,” RISMedia (Oct. 22, 2012)

Home Inventories Are Selling Faster.

Home Inventories Are Selling Faster

Home Inventories of for-sale homes aren’t the only thing that is dropping. The amount of time homes are staying on the market is growing shorter as well—down 11 percent in the last year—according to the latest Realtor.com data.

Home Inventories were listed on average 95 days, according to September housing data. That is down from 107 days a year earlier.

Home Inventories are selling the fastest in Oakland, Calif., in which the median age of the inventory averages 21 days, which is 57 percent below what it was a year ago. Denver, Colo. boasts a median age of inventory of only 38 days, followed by fast-selling markets of Stockton-Lodi, Calif., with 43 days, and San Francisco with 44 days.

As the median age of the inventory is falling, Home Inventories of for-sale homes continue to hover at record lows too, dropping 18 percent last month compared to a year ago.

“There’s a recovery,” Curt Beardsley, vice president of Realtor.com, told BusinessWeek. “Our market times are low and there’s actually a compression of inventory.”

Home buyer demand is increasing, with housing affordability still high and ultra low mortgage rates that have pushed home buyers’ purchasing power higher. The rise in demand has caused asking prices to also rise. Last month, the median asking price was $191,500, which is up 0.8 percent compared to a year earlier, Realtor.com reports.

Source: “Listings of Homes for Sale Drop as U.S. Housing Recovers,” BusinessWeek (Oct. 15, 2012) and REALTOR® Magazine Daily News

Home builders may benefit from the drop in distressed properties.

“Fitch: Home builders to Get Boost From Falling Foreclosures”

Home builders may benefit from the drop in distressed properties.

Home builders may benefit from the drop in distressed properties in recent months, which might spur greater activity in new-home construction, according to a new report by Fitch Ratings.

Distressed home sales have hampered home prices the last few years. But with less competition from distressed home sales and rental prices, more home buyers may consider new homes, according to Fitch.

Robert Curran, Fitch’s managing director of home builders, forecasts single-family housing starts to rise 19 percent in 2012, and existing-home sales to grow 8.5 percent this year.

“However, we note that new home builders construction can be volatile as they fluctuate more frequently verses other [housing] indicators,” Curran says. “Although starts have been stronger for several months, we are hesitant to suggest that a V-shaped housing recovery is forming.”

Last week, the Commerce Department reported new home construction increased 15 percent in September.

Source: “Fewer Distressed Homes Could Spur Home Construction,” HousingWire (Oct. 19, 2012)