There are some pundits lamenting the softness of the 2014 housing market. We can’t understand why. Though it is true that the early part of the year disappointed because of a myriad of reasons (ex. weather, lack of inventory, less distressed sales), the recent housing news is extremely encouraging. Let’s give some examples:
Move, Inc. just last week revealed that this spring’s housing market finished stronger than any time in the last three years. In the report, Jonathan Smoke, chief economist for realtor.com explained:
"This is the first time, since the beginning of the recovery that we expect to see positive momentum throughout the second half of the year. While seasonal patterns are emerging in July month-to-month comparisons, all other metrics point to fundamental market health and a build-up of momentum."
In their latest Existing Home Sales Report, the National Association of Realtors (NAR) announced existing-home sales increased in July to their highest annual pace of the year. That is even though distressed property sales fell to 9%, the first time they were in the single-digits since NAR started tracking the category in October 2008. Lawrence Yun, chief economist for NAR explained:
“The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market. More people are buying homes compared to earlier in the year and this trend should continue.”
According to an article on Market Watch, new constructing is surging:
“Construction on new U.S. homes jumped 15.7% in July to the highest level in eight months and starts were revised up sharply for June, indicating a pickup in home building after an early-year lull. Housing starts climbed to an annual rate of 1.09 million last month…Economists surveyed by MarketWatch had expected starts to climb to a seasonally adjusted 975,000 in July.”
Foot traffic (the number of people out actually physically looking at homes) has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.
The latest foot traffic numbers show that there are more prospective purchasers currently looking at homes than at any other time in the last twelve months which includes the latest spring buyers’ market.
The spring market finished stronger than any time in the last three years. Home sales are at year long highs. New construction is beating estimates. There are more buyers out than at any time in the last twelve months.
We think the housing market is doing just fine.