Regardless of the statistical source, housing prices in the US are up, for the 75th consecutive month of y/y gains. The S&P CoreLogic Case Shilling National Index posted an annual gain of 6.4% in April 2018 and the US Census Bureau and Department of Housing and Urban Development (HUD) post a +6.7% gain in May 2018.
The median price for a new home was $313,000 in May 2018. The median price for an existing home was $264,800 in May 2018, a record high, up 4.9% from $252,500 in May 2017.
Cities west of the Rockies continued to lead price increases, according to the S&P CoreLogic Case Shilling Index. Seattle prices increased +13.1% y/y; home prices in Las Vegas increased +122.7% y/y; and, home prices in San Francisco increased +10.9% y/y.
The problem? While new home sales were mixed overall (-25.7% in the Midwest, -10.8& in the Northeast, +13.3% in the West and +6.2% in the South, according to Reuters), the US Commerce Department indicates an increase +2.9% in new home sales during May. Sales of existing homes, on the other hand, slumped for the 3rd consecutive month of decline, according to Tendayi Kapfidze, chief economist with Lending Tree.
And what is causing the problem? Lawrence Yun, chief economist with the National Association of Realtors, said, “Incredibly low supply continues to be the primary impediment to more sales, but there is no question that the combination of higher prices and higher mortgage rates are pinching the budgets of prospective buyers and ultimately keeping some from reaching the market altogether.”
The average days on the market (DOM) in May dropped to 64, its lowest level in 8 years, according to Trulia. Reuters indicates that it would take 5.3 months to clear the current housing inventory at the month of May’s sales rate. Obviously, DOM rates vary depending upon location. Properties in hot markets such as Seattle, San Francisco and even Denver can be sold within 26 days.
The brightest light in May’s housing market overview came from the number of housing starts. Single-family units jumped +3.9% and multi-family units climbed +7.5%. Overall, the increase was +5%, the highest level in over a decade. Compared with May 2017 the annualized rate of residential housing starts increased 20.d3%, according to the Bureau of Labor Statistics and HUD.