Existing home sales on the rise despite tight inventory
MetroCreative
Existing home sales are on the rise across the country and so are the prices as more people are looking to buy despite the market’s tight inventory.
The National Association of Realtors® (NAR) said the median price of existing homes is rising, but the increases don’t seem to be motivating many sellers or new-home builders, contributing to the growing lack of inventory in many markets.
“The spring buying season is right around the corner and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” said Lawrence Yun, NAR chief economist.
Foreclosures or short sales were attributed as the primary reason for the inventory shortage, said NAR, followed by job relocation.
For the most part, Fayette County is following the same trend, said Scott Detweiler, president of the Fayette Board of REALTORS®.
Detweiler said the number of existing homes on the market has been remained consistent at around 300 for the last several years.
“It seems like there’s never enough inventory, especially in the lower end of $150,000 and under,” said Detweiler.
At SWC Properties in Uniontown, the number of existing houses sold increased from 228 to 292 over last year, according to Danny Matthews, real estate agent.
He said the average sale price for the first three months of 2015 was $115,392 compared to $102,188 this year.
“The number of houses on the market is much lower right now than this time last year,” said Matthews. “We have the buyers looking for homes, just not a lot of homes for the buyers to choose from.”
Matthews added it’s not so much a “sellers or buyers market,” but more of finding the right home for the right buyer.
Overall, Matthews said the volume of existing home sales sold last year came in at $26,309,434 increasing to $29,838,980 to date.
While many seniors want to downsize, baby boomers indicated they have no intentions to move, according to the most recent survey from the Demand Institute.
This is just the opposite for a lot of younger people, said Matthews, as they are looking to get out of renting and buying cheaper starter homes.
Detwelier said some people don’t want to take on a new mortgage if their house is paid off while others intended for their first purchase to be a starter home, but found they don’t want the hassle of moving a number of years later.
Realtor.com® noted that the start of the year signaled a growth in demand, resulting in an acceleration in inventory movement typically not seen until March or April.
In its latest housing report, realtor.com® stated list prices for February inched up one percent over January, reaching $230,000 marking an eight percent increase over last year.
Jonathan Smoke, realtor.com®’s chief economist said, “The people who didn’t buy last year were frustrated because they were outbid or couldn’t find a home that met their needs.
“So they more or less took the holidays off, and are back with way more intensity.”
Although the pace is growing, NAR said home sales are taking longer to close because of new forms and procedures that took effect last fall.
Yun said existing home sales kicked off 2016 on solid ground, rising slightly to the strongest pace since last July 2015 at 5.48 million.
“Home prices ascending near or above double-digit appreciation aren’t healthy – especially considering the fact that household income and wages are barely rising,” he said.
According to Yun, the housing market has shown promising resilience, but home prices are continuing to rise because of ongoing supply constraints.
Despite the global economic slowdown, Yun added the housing sector continues to recover and will likely help the U.S. economy avoid a recession.
The median existing-home price for all housing types in January was $213,800, up 8.2 percent from the same time last year at $197,600, reports NAR.
Properties typically stayed on the market for 64 days in January with 32 percent that sold on the market for less than a month.
Meanwhile, NAR said short sales were on the market the longest at a median of 77 days in January while foreclosures sold in 57 days and non-distressed homes took 61 days.
U.S. home prices rose 5.4 percent in December, the largest annual gain since July 2014.
The median sales price of a previously owned home also jumped 8.2 percent from last January.