Existing home Sales were expected to meet or exceed the Sales Level Last April
Inventory was expected to rise. A Record April Average Sales Price was expected.
Existing Home Sales have been struggling due to a lack of Inventory. We had more inventory than buyers during the Great Recession. We had a glut of inventory between 2005 and 2012. The law of supply and demand applies to real estate. We have been seeing same month inventory improvement since August 2018. The April Forecast Article projected increases month to month and April to April for Inventory, Units Sold, and Average Sales Price. What was recorded and what was reported by the REALTORS?
The Inventory Level jumped to 1.832 million units. Inventory was expected to grow for existing homes by 7% to 11% month to month and 2% to 5% April to April. Inventory was expected to be recorded non-seasonally adjusted between 1.8 million and 1.9 million units. This is 32,000 more units than we had during April 2018. It is still well below the "normal"m level of 2.1to 2.2 million units that we had during 2014, 2015, and 2016 during the month of April. Lower inventory normally means lower sales.
The Number of Units Sold this Month came in at 455,000. While it was possible that existing home sales could drop by up to 5% April to April, it was expected that the number of units sold would grow by 1% to 5% from the April 2018 level of 460,000 units. It was expected that the number of units sold would be recorded between 460,000 and 470,00 units, or roughly 465,000 units. This was a slight miss. It was also better than the number of units sold during April during 2008 through 2015.
The Average Sales Price Set an April Record at $305,200. It was expected that the Average Sales Price for Existing homes would set a record and that the average sales price would eclipse $300,000 this month. Shelter inflation has been consistently over 3.0%. Expect the average sales price to increase 3% to 5% month to month and 2.5% to 4.5% April to April. It was thought that the average sales price would break the 300,000 level and approach $306,000 to $312,000. The rising average sales price should shake loose some home sellers who are waiting for their homes to appreciate "after the recession." It has happened. People just do not realize it.
The Current Year data is better than they were during 2013 and 2015 during the month of April. So far there have been 1.451 million total units sold year to date. This compares with 1.430 million during April of 2015 and 1.436 million during April of 2013. Those years we ended with 5.256 million (2015) and 5.087 Million (2013) units sold. Last year we had 5.34 million units sold, combined condominiums and single family homes. We may be able to reach the 2018 level of sales by the end of the year.
The Rolling Year data is also better than 2013, 2014, and 2015 as of April. We have seen 5.267 million units sold during the past 12 months. The "rolling year" data was 4.785 million during April 2013, 4.991 million during 2014, 5.02M during 2015. The graphics can be found here. The current year data being ahead of the 2015 level means that we should end the year ahead of the 5.256 million we recorded during 2015. Could we hit 5.275 million? yes. This is different from the "headline" 5.190 million seasonally adjusted units projected by the REALTORS.
Existing home sales have an economic multiplier effect on the rest of the economy. Home sales great retail sales and work for those in both the professional business sector and the retail sector. People will buy new furniture and furnishings for their purchase. Sometimes a new appliance or two are needed. Real estate transaction require real estate professionals in loans, insurance, moving and selling.
All real estate is local. The average sales price of your home is dependent upon you location, condition and motivation to sell. You sales price can be determined by what is happening in your city, town, village, school district, neighborhood and style or age of home and your amenities.Consult a REALTOR.
Are rising interest rates impacting house sales? Yes. Just not the way you are expecting. The average sales price for existing sales have been rising since 2012. The thirty year fixed rate has been bouncing around between 3.45% and 4.34%. The 30-year fixed was 4.14% at the end of April. If classic economic were applied to real estate, a drop in "price" should spike "demand," and more units should have been sold. What is forgotten is that as interest rates fall home buyers attempt to "catch the falling knife." They don't want to "lock" at too high of a price.
Units sold appear to be accelerating as interest rate increase. There was a drop in sales from 2005 through 2008 even as interest rates were falling. Sales started to pick up as interest rates continued to fall. We failed to hit the peak sales of existing homes during June 2014, 2015 and 2016 that we had during June 1999. We will have a better handle on this situation within the next two to three months. It appears that FOMO, the "fear of missing out,"is encouraging buyers to buy.
We should see increased sales as the inventory continues to recover and grow. A "healthy inventory" level is between 2.0 million and 2.5 million units. We should see average sales prices be bid higher as stories of multiple offer homes start circulating in the press. We cannot have strong sales without a strong inventory level. What was missing from most discussion was the lack of full-time jobs during 2007-2017. We may see sales pick up now that we have had two years of consistently improving jobs data.
It's the economy.
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