Home Sales Decrease Despite Many Positive Signs
If you have been following the housing market, you may have seen the headlines for home sales dropping in April.
With some of the headlines out there, you may think the market is crashing.
However, if you have been really paying attention to the information out there, you will know that the housing market is doing just fine.
In fact, 36 of the 50 states are seeing an Average Days On The Market (DOM) of 90 days or less.
Year-over-year home sales have increased for 7 consecutive months, and April home sales were still up 6.1% over April of 2014.
Additionally, April marked the second month in a row that the national home sales pace was above the 5 million mark.
The National Association of Realtors (NAR) Pending Home Sales Index again increased in April for the fourth consecutive month and reached the highest level in 9 years.
April 2015 saw 14% more Pending Home Sales than April of 2014, which is the biggest annual increase since September 2012.
The Index has now increased it’s year-over-year numbers for eight straight months, and is at the highest level since May 2006.
Foot Traffic, another indicator of buyer demand and future sales, remained the same from March.
So, prices continue to increase, buyer demand remains strong and interest rates remain below 4%.
With all of these positive signs in the housing market, why did the sales numbers decline 3.3% from March to April?
The same issue that has been plaguing the housing market–Inventory.
A lack of enough homes for sale to meet the high buyer demand is a big reason home prices continue to rise.
For many of these buyers, they simply cannot find the house they want because it is not on the market.
Or worse, if they find a house they like, it is not uncommon for that house to also interest other buyers.
This creates a bidding war. Great for the seller, but the buyers lose. According to Lawrence Yun, Chief Economist for NAR:
“Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace,” says Yun.
“To put it in perspective, roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012.” (emphasis added)
For buyers, this is still a great time to buy a home, despite the lack of inventory. Interest rates rose to their highest level in 2015, yet they still remain below 4%.
Mortgage credit availability continues to increase, making qualifying for a mortgage easier.
Some more good news for buyers and the housing market is New Home Sales are off to their fastest start in seven years.
Builders see the strong demand and are acting quick to respond to it. New Home Sales increased in April by 6.8%.
Buyers often prefer new homes over existing homes, so this gives buyers more options and a chance to build a home to their specifications.
Working against buyers is the rental market–specifically would be first time buyers.
Rental vacancies hit a 21 year low at the end of 2014, and they remain at or below that level today. As a result, rents have also seen sharp increases.
For most renters, owning a home is cheaper than renting.
As hard as it might be to find a house to purchase, trying to find suitable housing to rent is just as tough, if not tougher.
For home sellers, home sales numbers do not really matter because the one key thing they need to know is that there is a large demand for homes and a supply that cannot keep up.
If you have been on the fence as to whether or not to sell, the increasing home values along with strong buyer demand should make the decision easy.
There are many good signs in the current real estate market–you just have to look past the sensationalistic headlines and dig a little deeper.
2015 could be a tremendous year for the housing market, but the elephant in the room continues to be inventory.
If inventory levels can increase closer to a 6 month supply, then that could really give the market a big boost.
It would slow down increasing values, but it would alleviate the pent up buyer demand. It could also motivate buyers that are on the fence to jump in, and possibly bring in some other potential buyers.
While now is a great market for buyers, it really is a great market to sell, and sellers are what is needed right now.
If you are thinking about buying or selling in the Charleston SC area, then visit my Pam Marshall Realtor website and see why I am the best agent for the job.
You can also track local home sales numbers on my Charleston SC Real Estate stats page.