The US housing market has had some trouble of late but resales fell in February—more than expected—even among a persistent shortage of properties. But that shortage is pushing prices up, and that could account for shy buyers.
According to Lawrence Yun, chief economist for the National Association of Realtors, closings retreated in February were probably due to the shortage or properties and poor affordability conditions. He contends, “Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” adding, “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”
Now, it is important to note that sales are up 5.4 percent from February of last year, showing that housing market recovery can, in fact, sustain even in the face of rising mortgage prices. Houses would typically only stay on the market for 45 days, down from 50 in January, but that does not necessarily seem to be the case any more. Also, sales in January went unrevised at a pace of 5.69 million units, the highest since February of 2007.
Yun goes on to say, “A growing share of homeowners in NAR’s first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily.”
For all housing types, the median existing-home price hit roughly $228,400. This is up 7.7 percent from the previous year, in February (when it was $212,100). But it is also important to consider that February’s price increase was the fastest since last January (which was a rate of 8.1 percent), but marks the 60th consecutive month of year-over-year gains.
Yun continues, “The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future. Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers.”