2012: The Year of the Housing Recovery

Here are some highlights from yesterday’s RE/MAX National Housing Report for July, based on Multiple Listing Service housing data in approximately 54 metropolitan areas:

1. July home sales were 10.3% higher than sales last July and year-over-year home sales have now risen for 13 consecutive months.

2. The median sales price of homes sold in July was $169,000, a 3.7% increase over the $162,970 median price of July 2011, and the sixth month in a row with year-over-year increases.

3. For homes sold in July, the average Days on Market (days between listing with MLS and when a sales contract is signed) was 82. This was a drop of 2 days from the average in June and 6 days from July 2011.  The Days on Market average continues to fall in many markets due to low inventory.

4. The inventory of homes-for-sale fell 5.4% from June and 26.8% from July 2011. Inventories have now fallen for 25 consecutive months. A shrinking inventory is helping home prices rise, but may also be limiting sales. Given the current rate of sales, the average Months Supply is now 5.3, about two months lower than the 7.2 average in July 2011. Very low Months Supply exist in San Francisco (1.2), Los Angeles (1.8), Denver (2.4), Orlando (2.5), Phoenix and Miami (3.1).

strong>MP: RE/MAX points out that the low inventory levels of existing-homes are becoming a challenge to the recovering market and may be holding back sales.  But with rising home prices, many of the previously reluctant sellers and those with low or negative equity may now be increasingly willing to put their homes on the market, which could ease the low inventory issue.  Further, the 29.5% increase in July building permits and the 21.5% increase in July housing starts will add new housing inventory going forward, and could also help address the low housing inventory levels.

The increases in July home sales and median sales prices reported by RE/MAX at the national level are being confirmed by recent housing reports coming from many metro and state areas, here’s a sample:

St. Louis: Home sales increased 25% in July.

Wisconsin:  Home sales increased 17.3% in July, which was the 13th straight month of a double-digit sales gain. The median price increased by 2.1% and was the 5th consecutive monthly increase.

Austin, Texas — Central Texas home sales rose 20 percent in July, the 14th straight month of year-over-year increases. The median sales price increased by 9 percent to $214,000 and marked the sixth straight month the median increased compared with the same month last year.

California:  Home sales increased 14% in July and median sales price by +11.5%.

Minneapolis-St. Paul: July homes sales up by 14.6% vs. last year and 58% vs. two years ago.  Median sales price increased by 14.3% to a four-year high for July. Pending home sales in July were 24.3% higher than last year, and 65% higher than July 2010.

Bottom Line: RE/MAX is saying that “2012 has become the year of the housing recovery,” and the housing sales data so far this year and for July supports that statement: multiple months of rising home sales and median prices, faster marketing time, increases in pending sales, and low inventory levels.  The National Association of Realtors reports on existing-home sales for July tomorrow, Census report on new home sales in July on Thursday, and the Case-Shiller report on home prices comes out next Tuesday, so we’ll have lots more housing data over the next week to further assess the strength of the U.S. housing recovery.

About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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