Us housing market steps up a gear

Photo credit: Cyndie

The US housing market has stepped up a gear, with sales increasing once again in the second quarter of 2015. Total existing-home sales, including single family and condo, increased 6.6 per cent to a seasonally adjusted annual rate of 5.30 million in the second quarter, and are now 8.5 per cent higher than the same period last year.

Supply, though, is limited, which has caused house prices to climb in the face of growing demand. At the end of the second quarter, there were 2.30 million existing homes available for sale, slightly above the 2.29 million homes for sale at the end of the second quarter in 2014, but the average supply during the second quarter was 5.1 months — down from 5.5 months a year ago.

The median existing single-family home price increased in 93 per cent of measured markets in the three months to June 2015, according to the National Association of Realtors, with just 13 areas (7 per cent) recording lower median prices from a year earlier.

The number of rising markets in the second quarter increased compared to the first quarter, when price gains were recorded in 85 per cent of metro areas. 34 metro areas in the second quarter (19 per cent) experienced double-digit increases, a decline from the 51 metro areas in the first quarter. 19 metro areas (11 per cent) experienced double-digit increases in the second quarter of 2014.

"Steady rent increases, the slow rise in mortgage rates and stronger local job markets fueled demand throughout most of the country this spring," comments Lawrence Yun, NAR Chief Economist. "While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas."

Declining affordability remains a hurdle for renters considering homeownership, especially in higher-priced markets. Indeed, the national median existing single-family home price in the second quarter was $229,400, up 8.2 percent from the second quarter of 2014 ($212,000).

"The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth," adds Yun. "In the meantime, inequality is growing in America because the downward trend in the homeownership rate means these equity gains are going to fewer households."