The National Association of Realtors Existing Home Sales Report, which measures closings on existing homes, showed sales were up 14.5% in February at a 4.5 million unit annualized pace. This figure came in a lot stronger than the meager 5% anticipated and ended a 12 month streak of declines. Year over year, sales were down 22%. This is a lot stronger than the -37% from the previous report for January.
Housing inventory remained at a low level of 980,000 but is up 15% year over year. The media reported this as a huge increase and was too optimistic about the 15% increase. However, when we put this into perspective, housing inventory is up from a record low level of 850,000 from last year.
Additionally, there is a 2.6 months’ supply of homes. That is very tight because a 4.6 months’ supply is considered normal. However, if you look at active listings, there are only 578,000 homes available which means that 41% of available inventory is under contract and cannot be purchased! When you look at the month’s supply of available homes for sale, it’s really a 1.5 months’ supply. This fact speaks to demand as in a normal market, only 25% of inventory is normally under contract.
It is evident that the housing market is still heavily sought out and inventory levels are low at first look, but they are even lower when you look deeper into the report at homes that are actually listed for sale. The dynamics of this current market are supportive of home pricing because inventory is still low and demand is still very strong.
Source : http://bit.ly/3ZaYY5NBy: Jon Iacono