Wow! Total existing-home sales, which are
completed transactions that include single-family homes, townhomes,
condominiums and co-ops, rose 0.4 percent to a seasonally adjusted annual rate
of 5.47 million in January from a downwardly revised 5.45 million in December.
Sales are now 11.0 percent higher than a year ago – the largest year-over-year gain since July 2013 (16.3 percent).
This is creating a bottle neck for
home buyers, as the unsold inventory of homes is down to 4 months, with such a
hot sales market. Yet first-time home
buyers are hanging in there with 32 percent of sales, up from 28 percent last
year, and below the 40 percent during more normal times.
The median
existing-home price for all housing types in January was $213,800, up 8.2
percent from January 2015 ($197,600). Last month's price increase was the
largest since April 2015 (8.5 percent) and marks the 47th consecutive month of
year-over-year gains.
Lawrence Yun, NAR chief economist, says existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015 (5.48 million). "The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints," he said. "Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession."
The
S&P/Case-Shiller U.S. National Home Price Index, a more accurate
measure of overall existing-home prices because it uses a 3-month average of
same existing-home prices, recorded a slightly higher year-over-year gain with a 5.4 percent annual increase in December 2015
versus a 5.2 percent increase in November 2015.
Portland,
Denver and San Francisco prices continue to rise the fastest, with more than 10
percent annual increases. But Tampa and
Seattle are close behind. These prices
reflect the growing prosperity of high growth regions, and are reflected in a
recent survey of cities and regions with the most job creation.
This
incredible graph captures where job growth is actually happening—on the coasts
for the most part. Marketwatch says cost-estimating
website HowMuch.net used data
from the Bureau of Labor Statistics to create this three-dimensional
representation of the number of jobs added by metro area. It should be no
surprise that California with its Silicon Valley led all states with more than
464,000 jobs related.
The Greater New York metropolitan
area, which includes Newark and Jersey City, showed the highest increase for
any single metro area in the country with 156,400 new jobs. And, the Los
Angeles metro area, including Long Beach and Anaheim, was second at 135,100
jobs.
This means
more housing is needed and the construction industry is finally beginning to
respond, with housing starts now above a 1 million unit rate, and permits for
new housing even higher. Why are
first-timers able to buy? The medium
household income has also risen, up 6.5 percent since 2013, and interest rates
are back to historical lows, making home buying more affordable.
But continuing
housing recovery is dependent on more and higher paying jobs. We know the millennial generation, from 18 to
36 years, will be key to this happening.
They now make up 53 percent of the working age work force.
However, their
pay is still at the low end, according to data from the Minnesota
Population Center's 2014 "American Community Survey" in the
Integrated Public Use Microdata Series. The medians ranged between a low of $18,000
per year in Montana and a high of $43,000 in the District of Columbia. It’s
because so many are still teenagers or in school. But that should change in coming years.
Harlan Green © 2016
Follow Harlan
Green on Twitter: https://twitter.com/HarlanGreen
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