September 2019 saw home prices jump nearly +6% annually, according to the National Association of REALTORS® (NAR), low inventory supplies continued, high demand continued, and sales volume disappointed.
Along with the fact that low supplies always cause upticks in pricing, home prices were stimulated even more so by low mortgage rates. (Low mortgage rates translate into increased affordability, cheaper money and increased consumer purchasing power. Buyers can simply afford “more house” at higher prices when interest rates are low and money is cheap.)
According to Peter Boockvar, chief investment officer with the Bleakley Advisory Group, “…the housing market has certainly responded favorably to lower mortgage rates, but the price points and geographies are mixed. Higher priced homes, particularly in high tax states, are sitting longer, while those selling below $500,000 in the South and parts of the West are moving faster.”
Demand in September continued to be high. (Realtors measure demand by the number of times prospective buyers open their electronically monitored lock boxes.) The problem is that high demand is not translating into high sales numbers.
Coupled with the facts that home sale prices jumped nearly +6%, sales volume fell to just +3% and the number of homes for sale at the end of September 2019 dropped -3% compared to September 2018 (for the fourth consecutive month, incidentally), Lawrence Yun, chief economist with NAR) again bemoaned the fact there simply are not enough homes on the market for sale.
Yun said, “…given the severe shortage of overall houses (both existing and new homes) for sale, we need more competition in the homebuilding industry”… to stimulate sales volume. Yun put his fishing pole in the water for three different but not mutually exclusive scenarios to kick up sales:
- Encouraging small builders to get into the market in order to provide more homes for sale and to provide more competition in the marketplace
- Turning “suffering” shopping malls into condominiums
- Building more micro-units.