Mr. Otis to the Sales Room
The most important bits of economic data that are released during the course of a month are the Jobs data, the New home Sales data, and the Existing Home Sales Data. We have had a solid run of Jobs Reports during the first three months of President Trump's Presidency. People who have jobs, full-time jobs, can qualify for mortgages. The recovery of the housing market has been slow and steady, in part due to the elevated levels of part-time workers and dual job workers, and partly due to damage to potential home buyers' credit histories. There were a considerable amount of foreclosure sales and bankruptcies that have negatively impacted potential home buyers.
The Spring Housing Market Means Increasing Units Sold and Increasing Sales Prices through July for New Homes and August for Existing Homes.There is also a surge in New Home Sales at the end of the year. If this year is similar to last year then we should see considerable increases in units sold and sales price as compared to March of this year and April of last year.
The Existing Home Market Continues its return to the units sold during 2005-2006. The existing home market has not fully recovered from the Great Recession. Sales prices have recovered and exceeded the average sales price level of 2005 and 2006. This means that people who bought homes prior to the recession, dependent upon local conditions, should be able to sell their homes for more than they paid if they bought their homes prior to the recession. We saw 456,000 units sold during March of 2017 and 470,000 units during April of 2016. We should see the number of units sold increase by 10-20% from last month and 6-13% as compared to April of last year. The month to month growth means that we should see 500,000 to 547,000 units sold during April. The annual growth rate places that number between 498,000 and 531,000 units sold. Expect Units Sold to be between 515,000 and 525,000 Units.
The Average Sales Price of Existing Homes should surge, too. We normally see a "pop" of 2.5% to 5.0% on a month to month basis between March and April. We normally see a 6% to 10% surge in sales prices from April to April. We saw an average sales price of $278,500 during March of this year. We saw an average sales price of $273,600 last April. The range of increases mean that we should see and average sales price of $285,000-$292,000 based on month to month growth. The annual value should be between $290,000 and $301,000. We have a housing shortage for existing homes, as was evidenced in the prior Existing Homes Sales Reports. Januarywe saw a shortage. February we had a shortage. March we had a shortage. Supply and demand means when demand is elevated and supply is short price rise. Expect a value of $299,000 or higher.
New Home Units Should Surge Over 60,000 Units for the Month of April. We have ample new homes from which to choose. We used to sell 60,000 to almost 120,000 units every April from 1993 through April 2005. We have languished during this recovery. We should see an increase of 0-12%% compared to March of 2017 and an increases of 14-24% from Last April. We saw 58,000 units sold this past March and 55,000 units sold last April. The increase in month to month units means we should see 58,000 to 64,000 units sold during April. The annual growth rate pegs that range between 62,000 and 68,000 units. Expect a value between 60,000 and 66,000 - or 63,000 units.This would still be slower than 1996-2007 and it would be much faster than 2008-2016.
The Average Sales Price for New Homes Could Exceed $400,000. The Average Sales Price for new homes has "gone vertical" during the past few years. Lumber costs, land costs, and upgrades to bathrooms and kitchens are most certainly driving these sales prices higher. It is also possible that the existing home shortage may be fueling the demand for new homes. The average sales price should increase by 4%-16% compared to last year's $380,000 average sales price, yielding a range of $399,000-440,000. The growth rate from March to April should fall between 3-13%, from a base of $388,200. This increase from last month would yield a range of $388,000-400,000. Anything over $380,000 would be an April Record. Expect a value between $395,000 and $399,900.
Calling Mr. Otis - The Housing Market is heading up. Sales people know that Mr. Otis is a reference to the elevator and to a manager knowing that the salesperson was having problems getting the buyer to move higher. There is room for new and existing homes to sell more units. WE have sold more during prior April selling periods. There is room for the average sales price to climb - we are in uncharted waters for both existing and new home sales with regard to price.The Consumer Price index has been recording inflation for shelter greater than the "core" inflation. How much "inflation" we see this month depends on the revisions to the prior data periods.
It will be interesting to see if existing home inventory remains low or if it starts to grow. It will be interesting to see how high and how fast the number of new homes sold can eat into the new home under construction inventory. Supply and demand means that, in theory, the new home sales price could fall due to "over-supply" while the existing home sales price should soar due to a lack of supply. That's the theory.
It's the economy.