Real estate market trends continue to improve, enabling American homeowners to rebuild wealth, according to today’s reports on existing home sales and home prices. Learn more.
Improving real estate market trends have helped American homeowners rebuild wealth, and are expected to stimulate consumer spending by up to $110 billion this year, according to a report released today by the National Association of Realtors.
Existing home sales rose 0.8 percent in the month of February, while existing home prices increase 11.6 percent. Twelve consecutive months of gains has pushed the median existing home price up to $173,600 in February, a year-over-year increase of 11.6 percent and the largest annual gain since November 2005.
“A strong rise in home values is contributing to housing wealth recovery, which has risen by $1.4 trillion in the past year and looks to top that increase this year,” Lawrence Yun, the association’s chief economist, said in a statement. “The extra consumer spending arising from growth in housing wealth is expected to be $70 billion to $110 billion this year.”
Sales of existing homes took place at a seasonally adjusted rate of 4.98 million in February, the highest rates since the new home buyer tax credit boosted sales in November 2009. The pace is 10.2 percent higher than the rate of 4.52 million for February 2012.
“Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise,” Yun said. Home prices are rising at a significantly faster rate than rents, but historically low mortgage rates are keeping homes affordable. “The only headwinds are limited housing inventory, which varies greatly around the country, and credit conditions that remain too restrictive.”
The inventory of existing homes for sale rose 9.6 percent in February to 1.94 million, enough to supply the market for 4.7 months at the current pace, the association said. Inventory is 19.2 percent below February 2012 levels when the association reported a 6.4 month supply.
As separate report released today by the Federal Housing Finance Authority confirmed upwardly trending real estate market trends. The FHFA House Price Index rose 0.6 percent from December to January and now stands at levels roughly equivalent to September 2004 and 14.4 percent below is April 2007 peak. The index, which tracks the purchase price of homes purchased through Fannie Mae or Freddie Mac, gained 6.5 percent for the 12 months ending January.
In other real estate market trends, the average time on market for existing homes was 74 days in February, down 24 percent from February 2012, and the share of homes purchased by investors rose to 33 percent in February up from 28 percent in January.