Existing home sales beat expectations with a climb to 5.71 million units, seasonally adjusted annualized (SAAR).
Econoday calls this an acceleration, is that what’s happening?
Highlights
The resale market, after a period of steady sales, is now accelerating to new expansion highs. Existing home sales rose a very sharp 4.4 percent to a higher-than-expected annualized rate of 5.710 million. This is the best rate since February 2007. Both components show strength with single-family sales up 4.3 percent to a 5.080 million rate and condo sales up 5.0 percent to a 630,000 rate. And year-on-year sales are moving higher, up 5.9 percent divided between 6.1 percent for single-family homes and 5.0 percent for condos.
The month’s gains aren’t tied to concessions as the median price rose 3.6 percent to $236,400 for a year-on-year rate of 6.8 percent that matches well with the sales trend. Supply, up 5.8 percent in the month to 1.830 million, moved into the market but was absorbed by rising sales which kept supply relative to sales unchanged at 3.8 months. The lack of supply and heated sales pace are reflected in days on the market which are down to 34 from 45 in the prior month and 47 days a year ago.
Housing contributed to last year’s economy but never kicked into top gear, which is what this report is hinting at. Watch on Tuesday’s calendar next week for new home sales which in the previous month shot higher much like today’s report.
Steady Upward Trends Since January 2014
Unfortunately, the data on Fred, the St. Louis Fed repository, only goes back to 2012.
Acceleration?
Acceleration is best thought of as an increase in the rate of change. Race car driving provides a nice example as does gravity (the speed at which an object falls over time). Other than random fluctuations, there is no acceleration, just a steady linear trend.
Sales in February 2007 were at a rate of 5.79 million units according to Mortgage News Daily.
Thus, after 10 years, we are back to pre-recession levels.
Comments from Lawrence Yun, NAR Chief Economist
- “The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month,” he said. “Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.”
- “Bolstered by strong consumer confidence and underlying demand, home sales are up convincingly from a year ago nationally and in all four major regions despite the fact that buying a home has gotten more expensive over the past year.”
- “Last month’s swift price gains and the remarkably short time a home was on the market are directly the result of the homebuilding industry’s struggle to meet the dire need for more new homes. A growing pool of all types of buyers is competing for the lackluster amount of existing homes on the market. Until we see significant and sustained multi-month increases in housing starts, prices will continue to far outpace incomes and put pressure on those trying to buy.”
Real Homes of Genius
The “dire need for new homes”, if indeed accurate, which I doubt, can be attributed to the fact that builders cannot build and price cheap houses to make a profit.
Dr. Housing Bubble provides an excellent example in Real Homes of Genius, including pictures of tiny homes listed for close to $500,000 in the Los Angeles area.
Today we salute you Los Angeles with our Real Homes of Genius Award. When half a million dollars isn’t worth moving a trash bin:
3525 Portola Ave, Los Angeles, CA 90032
2 beds 1 bath 572 sqft
This place is tiny. 572 square feet.I actually like the trash can being left in the picture overfilled with crap to show you a better perspective on how small this place is. The ad is written in beautiful prose that really makes your heart jump with joy:
“Why Rent when You Can Buy! This House Features 2 Bedrooms and 1 bathroom with lots of potential especially for a First Time Home Buyer. Great Location close to Downtown Los Angeles, centrally located near Schools, Parks and Shopping. This house has been nicely upgraded.”
So let us take a Google Street View here:
More trash cans! One trash can looks like it is crossing the road or gearing up to strike a pose for another realtor’s ad. Now some might say “hey, this is a working class neighborhood!” And to that I would say, of course it is! That is why it is so mind numbing to see this tiny place listed at $470,000.
Top Gear? As Good as it Gets?
Econoday says the report hints at being in the “top gear”
If this is the “top gear”, is this as good as it gets?
Let’s hope so!
Those paying crazy prices will regret it every bit as much as they did in 2006.
Miek “Mish” Shedlock
Why does “best rate since 2007” not sound very encouraging?
Trump made housing GREAT again!
2 things
1) The year over year stuff is neglecting an important item – Easter. Easter early last year (March). Doubt many folks want to move over Easter.
2) 5 fridays in March. Many months numbers (related to consumers) with unexpected “beats” have 5 fridays. SOP is to close on a Friday and move over the weekend. Hoo in their right mind would schedule a tuesday closing (unless only option) and choose not to move until that weekend? A pro rated share of a standard size mortgage = several hundred $$s thrown away.
My neighbor down the street put their house on the market last week. Sold for asking price in one day. Cash….
Location ?
Jacksonville fl
Elections have consequences.
And it will take awhile to drain the swamp.
++++++
Mel Watt’s plan to loosen mortgage credit will shape housing finance for years
Newswires – May 23, 2014 – Joseph Lawler, Economic Correspondent
Despite being a new officeholder of a relatively obscure federal agency, Mel Watt drew a strong reaction for his speech Tuesday by signaling that the federal government will increase its role in helping more Americans buy houses.
For Republicans, it was the moment they had feared when, for months, they blocked President Obama’s nomination of the former North Carolina Democratic congressman to his current post as director of the Federal Housing Finance Agency. As the conservator – – the government steward — for Fannie and Freddie, the FHFA has massive influence over the mortgage market.
Watt began his speech noting “certain changes in focus” from the plans laid out by his fiscally conservative predecessor Ed DeMarco, and then outlined a number of plans to loosen the terms that Fannie and Freddie require for the loans they insure. The two government- sponsored enterprises buy loans from lenders and package them into insured securities, with the purpose of increasing liquidity in the mortgage markets.
Americans may understandably be concerned about the standards Fannie and Freddie require for the loans they guarantee — the two did receive $188 billion in bailout funds after risking trillions on bad loans.
The bottom line, and what likely motivated Watt to begin easing the FHFA’s terms, is that amid rising mortgage interest rates, mortgage originations, including refinancings, are at the lowest level in more than 10 years, according to Black Knight:
But Watt’s decisions will not just shape the short-term availability of mortgage credit. They also will play a critical role in shaping the housing finance system for years.
DeMarco had explicitly favored tightening the GSEs’ lending terms to shrink their market footprint and bring private capital into the secondary market for mortgages. By reversing course, Watt plans for Fannie and Freddie to maintain their market share — which in turn will lessen the pressure on Congress to wind down the two companies and reform the market.
Some analysts welcome the change. The Urban Institute’s Jim Parrott, formerly an Obama administration economic adviser, wrote in response to Watt’s speech that the private market is not currently capable of taking over market share from the GSEs, and that by limiting Fannie and Freddie’s presence, the FHFA simply would deny creditworthy borrowers the chance to own a house.
“Watt has signaled that he will turn from focusing on the enterprises as institutions in intentional decline to institutions that should be better prepared to form the core of our system for years to come,” Parrott wrote in praise of Watt’s decisions.
But Douglas Holtz-Eakin, the president of the right-leaning American Action Forum and a former Congressional Budget Office director, is skeptical of the changes Watt has planned. “This is sort of a re-creation of the worst aspects of their conduct,” Holtz- Eakin warned, referring to the troubled history of Fannie and Freddie as companies competing for market share heading into the crisis.
If the Obama administration determines that lending standards are too tight, Holtz-Eakin said, it should review restrictive rules promulgated by the Consumer Financial Protection Bureau and other federal financial agencies, rather than respond with an ad-hoc policy undertaken through the GSEs.
People are staying in one place long enough to catch their breath? Instead of going another half million into debt to buy a “keep up with the Jones” house? Oh no!!!! Assume the panic position.
As for the garbage infested shack in L.A. … its freaky California. Where math class got replaced with gender studies, and the “smartest guys in the room” house their families on top of earthquake fault lines.
Californians are not the sharpest tools in their $470K shed
The housing racket has been little more than a political corral for decades now. The goal being to sucker as many as possible into as much debt as possible for as little in the way of a house as possible. So that they, too, will then be self serving champions of the asset pumping that is the main mechanism by which the ruling class robs the productive classes.
The poor sap who spends his lifetime combined earnings on this dump, will then stomp and cheer for every harebrained dimbulb, who promises to lower interest rates below zero, to bail out Fannie/Freddie, to support more “ownership society” nonsense, to zone their neighbors clear into indigence etc…
All in the name of keeping the pretense alive that this trash dump has some sort of poppeti vaijue, and that he “did the right thing” by bowing down and taking his ordained place near the bottom of the pyramid Mr Goldman and Mr Sachs built for him. While doing his best to make sure those who don’t want to spend the rest of their lives paying usury the Goldman and Sachs for for trashdumps, are being punished into homelessness by that sacred text progressive drones call “The Law…” That’s how bootstomping drones, are most effectively being recruited, after all.
Although enough homes are no longer underwater from the last refi boom, there’s little to no profit to be gained by selling. A dead decade. Home owners instead choose to stay put and renovate what they have, if they can even do that. Things are simply out of whack, again.
I’ve been pointing this out here for over a year…now coming through in the data.
If houses were stocks, were about to see them test all-times highs, take out the highs…and up, up and away.
Thank you Chinese Laundry…..Money Laundry, that is.
OK Flat roof. Fences and walls right up to the sidewalk (not exactly inviting, may be restraining barking dogs in many of those lots), tiny lot, old stucco house in an earthquake zone. On the plus side, you get the art deco terra cotta look AND your neighbors can watch your house all the time, as well as hear any home invasion because they are just 10 feet away. Also, you net that really awesome (?) palm tree that your neighbors don’t have. Fortunately, it won’t likely rob the owner of too much sun exposure
GIMME!
Acceleration? Maybe. Your housing sales graph only has a linear trend because you fitted a straight line to part of the data. You can fit a line to any data set you want to, but that don’t make it linear.
For example, I could fit a nice parabolic curve to your same data set (including the pre-2014 part you decided to leave out), and this *would* show acceleration.
“Unfortunately, the data on Fred, the St. Louis Fed repository, only goes back to 2012.”
It used to go back further, so I would guess the lack of data is being used to draw desired conclusions.
Instead of using the term “Houses always go up,” maybe “The dollar always loses value” would be more appropriate?
Won’t even bother to assess the value of a pile of rent receipts over 20 or 30 years.