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Is U.S. Housing a Drag or a Tailwind?

John Blank

We have fresh data. Let’s discuss the U.S. housing market. 
First, April existing sales picked up.  That’s bullish. According to the National Association of Realtors (the NAR), total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose +1.3% (:SAAR) to 4.65 million in April from 4.59 million in March.  Existing sales are -6.8% below the 4.99 million-unit level in April 2013.

In addition, new home sales for April from the Census showed 433,000 (:SAAR) new homes sold, up +6.4% from March 2014, but -4.2% below the April 2013 estimate of 452,000.

NAR’s chief economist, expected the improvement, “Some growth was inevitable after sub-par housing activity in Q1…” 

Second, home inventory. Total NAR housing inventory at the end of April jumped +16.8% to 2.29 million existing homes available for sale.  This represents a 5.9-month supply at the current sales pace, up from 5.1 months in March. Unsold inventory is +6.5% higher than a year ago, when there was a 5.2-month supply.  

Friday's new home numbers from Census say the new homes fell to a 5.3 month supply.
Third, price increases are cooling. The median existing-home price for all housing types in April was $201,700, which is +5.2% above April 2013.  In Q1, the median price was +8.6% above a year earlier.
Fourth, the all-cash buyers are holding steady at a high level. All-cash sales comprised 32% of transactions in April, compared with 33% in March and 32% in April 2013. Individual investors, who account for many cash sales, purchased 18% of homes in April, up from 17% in March; they were 19% in April 2013.
Seven out of 10 investors paid cash in April!
Finally, distressed home sales are shrinking. But they are still significant.

  • Distressed homes – foreclosures and short sales – accounted for 15% of April sales, down from 18% in April 2013. 10% of April sales were foreclosures, and 5% were short sales.
  • Foreclosures sold for an average discount of -16% below market value in April. Short sales were discounted -10%.

My RTI question:  Is U.S. Housing a Drag or a Tailwind?

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