Housing Supply Outlook
Some claim that housing has stalled. The truth is that price recovery has simply outpaced comparable wage growth, which is a short-term challenge. With tight inventory and tight credit, further economic gains are needed in order for housing to regain some traction. It appears that some of those gains may have arrived in the form of better-than-expected second quarter growth. For the 12-month period spanning August 2013 through July 2014, Pending Sales in the Western Upstate region were up 2.1 percent overall. The price range with the largest gain in sales was the $200,001 to $350,000 range, where they increased 9.2 percent.
The overall Median Sales Price was up 4.6 percent to $137,000. The property type with the largest price gain was the Condo segment, where prices increased 16.1 percent to $104,500. The price range that tended to sell the quickest was the $100,001 to $150,000 range at 93 days; the price range that tended to sell the slowest was the $350,001 and Above range at 148 days.
Market-wide, inventory levels were up 6.9 percent. The property type that gained the most inventory was the Single-Family segment, where it increased 9.6 percent. That amounts to 14.3 months supply for Single-Family homes and 11.8 months supply for Condos.
Although low supply and tight credit standards are still hurdles to recovery, prices continue to rise in most local areas. Job growth has strengthened lately, but wage growth has not kept pace with the price gains we have seen. Buoyed by stable and continuously lower interest rates, affordability is still historically high yet below its all-time peak. Rising inventory levels will lead to more choices for qualified buyers, but as the summer reaches toward fall the prospect of more homes coming on the market begins to wane.
New Listings in the Western Upstate region increased 6.1 percent to 682. Pending Sales were down 35.7 percent to 231. Inventory levels rose 6.9 percent to 4,005 units.
Prices forged onward. The Median Sales Price increased 4.5 percent to $146,250. Days on Market was down 1.4 percent to 116 days. Absorption rates slowed as Months Supply of Inventory was up 4.7 percent to 14.1 months.
The U.S. Department of Commerce reported that GDP grew at a 4.0 percent annual rate in the second quarter and that the first quarter was less bad than previously thought. Consumer spending in the first quarter rose 2.5 percent, which is encouragingly in tandem with savings rates. Increased consumer spending means more demand for goods and labor; increased savings rates means more resources for downpayments. With rates still low, rents still rising and private job growth accelerating, it’s becoming more and more difficult to side with the housing perma-bears.
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