Tight market governs housing recovery: analysts

By Douglas Gillison, AFP

WASHINGTON – The U.S. housing market, a key economic driver, is exceedingly tight, with supply struggling to meet demand as the sector recovers a decade after the housing crisis, analysts say. But persistent and pent-up demand among would-be homeowners could spur builders to boost construction, helping to ease pressure on the market for new homes.

Inventory of homes for sale has remained stagnant even while the pace of sales returns to pre-crisis levels. “What I hear from realtors pretty much across the country is that if they had more inventory they could make more sales,” Lawrence Yun, chief economist at the National Association of Realtors, told AFP. Home sales jumped in January, with sales of existing homes rising 3.3 percent, the fastest monthly rate since early 2007, while sales of new homes increased nearly four percent, with buyers in the Northeast snapping up the largest volume of single-family houses in nine years. While demand has been bolstered by steady job creation and a pickup in wages in 2016, that exuberance has not translated into an increased supply of houses available.

Inventory for existing homes has fallen for 20 months in a row, and the number of homes for sale for every 1,000 households fell 47 percent between January 2008 and January of this year, according to figures from the residential real estate website Trulia. As the housing market continues to reemerge from the 2008 financial crisis — precipitated by a housing bubble and mortgage crisis — prices are recovering.

The median price for a new home rose 34 percent between January of 2008 and January of this year. Existing home prices have risen for 59 straight months, hitting a median of US$228,900 in January — up 7.1 percent over the same month last year. And 30-year mortgage rates also have moved sharply higher since the end of 2016, rising to 4.17 percent in February, up half a point year-on-year, according to government-sponsored mortgage agency Freddie Mac.