It would appear that the housing slump is now well and truly over. Existing home sales in the US have jumped to a level not seen since 2007. And given that house building has been somewhat restrained since then it would appear that prices are likely to move higher into the future:
U.S. home resales rose more than expected in March to the highest level in more than a decade, The National Association of Realtors (NAR) announced on Friday.
Existing home sales climbed 4.4 percent for the month, while economists were expecting a smaller increase of 2.5 percent, according to Thomson Reuters consensus estimates.
The actual numbers themselves:
Sales of existing homes climbed 4.4 percent last month to a seasonally adjusted annual rate of 5.71 million, the National Association of Realtors said Friday. This was the fastest sales rate since February 2007.
No, we do not think that another boom is imminent. It is indeed true that financial markets get swept up into manias from time to time but the old saw about them is that they only happen once everyone who remembers the last one retires. We’re a decade out from that last one so there are still plenty of people in the markets who recall how bad the aftermath of a boom can be. We’re not going to see liar loans and all that jazz come back, not anytime soon at least:
Median sales price rose 6.8 percent from a year earlier to $236,400
Inventory of available properties fell 6.6 percent from March 2016 to 1.83 million, marking the 22nd straight year-over-year decline
That’s not in the least surprising. Incomes are rising, family balance sheets are repaired, so there’re more people out there possibly interested in a house. An increase in demand, yep, we’d expect to see an increase in price. Nothing at all like the boom years though of course. We’re unlikely to see people trying to flip houses on a 6% annual price rise:
Tight inventory is still the biggest factor in the marketplace
One reason for that is the slowness of the housebuilding market in recent years. Yes, this is existing home sales. But unlike over here in Europe American houses tend not to last for centuries, just some number of decades (the methods of building contribute to that). So this past decade of less than normal new housebuilding is starting to cut into that stock of extant houses for sale.
There’s nothing we need to do about this of course. Outside the true blue coastal liberal strongholds there’s no particular shortage of places to build housing nor of permits to allow them to be built. So the market will react in the time honoured way, the increase in demand will be met by an increase in supply. We don’t have markets gone mad, like in the boom, so we can leave the markets alone to sort this one out.
Existing Home Sales Jump To 10 Year High In US – Forbes