Evidence continues to mount that the US housing market is not only bottoming but is passed bottom and currently well up the recovery road.
Arguably the most poignant is the National Association of Realtors telling us that existing home sales growth is slowing, not because of lack of demand but because supply is becoming tight in many areas.
Existing home sales were up 9.6% year on year in May according to the NAR. In the report for May, Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. "The slight pull-back in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring," he said. "Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier."
And in June, when existing home sales growth slowed to 4.5% year on year Yun said that the bigger story is lower inventory and the recovery in home prices. "Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets," he said. "The price improvement also results from fewer distressed homes in the sales mix."
According to the same data existing home prices grew 7.5% in the year ending June 2012, following growth of 7.9% year on year in May. The NAR also recorded a 5.9% growth in pending home sales for May, and in that report Yun predicted a 9-10% growth in sales for 2012 as a whole.
It is not just the NAR though, according to Realtor.com, which has access to listing and sales data from hundreds of Multiple Listing Services around the country, in June median prices rose in 99% of the 146 major markets it tracks by an average 2.7 percent over year-earlier levels.
Realtor.com also confirms the rapid absorption of inventory, reporting a 19.4% drop in inventory year over year in June. And in 17 large metropolitan areas, inventory is down by more than 30 percent. In Oakland, California, for instance, there are 58 percent fewer homes listed for sale than 12 months ago. In Seattle, inventory is 43 percent lower. In San Francisco and Phoenix, the drop has been just under 40 percent.
On top of that official indices show single family housing starts growing in June for the fourth consecutive month, which is on top of the already reported growth in construction of multi-family housing as big investors built apartment blocks to meet rental demand. Unsurprisingly the unemployment rate for construction workers has fallen 2.8 percentage points since June 2011.
A lot of people are skirting about on whether or not the market has bottomed. However, investors shouldn't be waiting for a definite bottom as by then bolder investors have already bagged the biggest money making opportunities. The truth is if you are still waiting for bottom in the US you are a latecomer and better make your move ASAP.
- Monday 23 July 2012