Existing home sales have best quarter since 2007

By JERAMY GORDON
STAFF WRITER

Despite low inventory and skyrocketing home prices, pent-up buyer demand pushed existing home sales to their best quarter in nearly a decade, according to a new report from the National Association of Realtors.

The total sales for existing homes, which include single family and condo, rose 1.7 percent to a seasonally adjusted annual rate of 5.29 million in the first quarter of 2016. This is up from 5.20 million in the fourth quarter of 2015, and is 4.8 percent higher than the 5.05 million pace set in the first quarter of 2015.

“In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007 (5.66 million),” said Lawrence Yun, National Association of Realtors chief economist. "The demand for buying is there, but unless the stock of new and existing homes for sale increases significantly – especially in several markets in the West – the housing market will struggle to reach its full potential."

Dwindling inventory hasn’t deterred buyers

At the end of the first quarter, there were 1.98 million existing homes available for sale, which was below the 2.01 million homes for sale at the end of the first quarter in 2015. The average supply during the first quarter was 4.3 months – down from 4.6 months a year ago.

And that’s despite a slight increase in the national median family income, which hit $68,431 in the first quarter of this year. Affordability did fall, however, thanks to climbing home prices and slightly higher mortgage rates.

The boom can also be attributed to move up buyers who have regained much of the equity lost during the housing downturn.

“Current homeowners in many metro areas – especially those who purchased a home immediately after the downturn – have enjoyed a sizeable boost in housing equity and household wealth in recent years,” said Yun. “At a time of stagnant wage growth and mounting rent increases, the same cannot be said for renters. Their inability to reach the market because of affordability and supply restrictions is contributing to rising wealth inequality in the U.S.”

The five most expensive housing markets in the first quarter were the San Jose, Calif., metro area, where the median existing single-family price was $970,000; San Francisco, $770,300; Honolulu, $721,400; Anaheim-Santa Ana, Calif., $713,700; and San Diego, $554,300.

The five lowest-cost metro areas in the first quarter were Cumberland, Md., $67,400; Youngstown-Warren-Boardman, Ohio, $77,500; Decatur, Ill., $83,300; Wichita Falls, Texas, $95,200, and Rockford, Ill., $95,800.

Published May 11, 2016

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