When Up is Reported as Down
The April Existing Home Sales Report was released by the Realtors to little fanfare. The April Real Estate Forecast article projected the possibility of over 450,000 total units being sold and a new record average sales price would be set for April. There are many ways to examine the monthly data. How are we doing this year compared to last year? How many Units were sold? What is our inventory situation? It is tough to sell what isn't for sale. It's impossible to sell what isn't for sale. What was recorded? What was reported?
We recorded 460,000 units sold during April this year. This number is a combination of condominiums and single family homes. The "headline number" is an annualized, seasonally adjusted units sold number and that declined from 5.54 Million last April to 5.46 million this April. That is not what happened, as will be explained later in this article.
The Average Sales Price hit a record high for April at $297,300. If you bought a home after the Housing Recession hit this is good news. You home has appreciated almost every year since 2009. This increase in average sales price is an increase of 3.30% from last April and 2.55% higher than just last month. We have been recording 3% increases in shelter costs for "years," according to the CPI report.
Inventory is rebounding. This month we had 1.8 million units for sale. This is the same number as were for sale last March, March 2017. The year over year inventory has been seeing same month declines since 2015. Will we see inventory exceed last May's inventory level this May?
The Rolling Year Sales data is up compared to April 2016 and April 2017. We had seen 5.33 million units sold May 2015 through April 2016. We had seen 5.481 million units sold May 2016 through April 2017. We have seen 5.501 million units sold since May 2016. This is only a 0.3% increase in sales compared to last year. This is still better than the reported decline of 1.44% in annualized sales.
We are trending with last Year's Data - 5.631 million units by year's end. Last year the current year data was 1.5326 million units. This year we are at 1.526 million units. If we have grown by 0.3% then this year we might see the 5.631 million units edge up to 5.65 million units. If we see our units sold fall by 0.3% then that end of year number could be 5.59 million units. Either way that you examine the non-seasonally adjusted data, we should see a value higher than the 5.46 Million units reported today, and better than the estimated 5.54 M seasonally adjusted data that we had last year at this time. The current year data is trending higher than the rolling year data so the housing market appears to be expanding.
Real Estate Market is awakening. Right now, outside of Toledo, I am seeing a considerable number of "Coming Soon" signs attached to the real estate for sale signs. I am also seeing a number of homes that seemingly come on the market during the morning drive that have "pending" signs that afternoon. This is reasonable based on the nation data. All of the data in this article is the National data. All real estate is local. Real estate values can change by city, school district, neighborhood or condominium association, age, style of home, and condition. There was a saying "Location, Location, Location." These days it is "Location, Condition, Motivation, and Price." When someone who does not have to sell meets a buyer that does not have to sell then we get the real market value. If someone "has to sell" then he or she would sell for a lower than market price. Conversely, if a buyer "has" to buy a home then he or she would pay "more than expected." When there is a lack of inventory then there is an elevated potential for multiple offers and "over-bidding." This is something that an appraiser needs to know because it may impede the sale if the appraiser does not understand the underlying cause of the overbid.
Right now it appears that the real estate market is steadily picking up steam. It does not appear to be overheating with an exceptional amount of inventory, on the high side, or an exception number of units sold. There is real growth April 2017 to April 2018 in Average sales price and in the units sold. The pace of growth in the average sales price has been fairly steady since 2011. Inventory levels are improving. It would be great to see inventory nationally of 2.0 million to 2.3 million units this Summer. If inventory improves then units sold could and should improve. This month Up was reported as down because the authors of the report were comparing seasonally adjusted data to seasonally adjusted data and not really comparing the real, unadjusted, data with where we were last year or during prior years. A lack of inventory has impeded sales. Growth in inventory may relieve some pressure on sales prices.
It's the economy.