U.S. Housing Market Hits a Rut
As I noted in a prior post, certain regional housing markets are experiencing a temporary slowdown. There were some hints that particularly high-demand regions would undergo some decline in sales – prices rose too dramatically for this to not be a consideration. However, recent analysis suggests this trend may be deeper and more widespread than previously expected. According to a new report from Forbes, the downturn in home sales last month was especially sharp. Monthly home sales dropped 14.5% in March from February, and dropped a full 13.3% year-over-year. Citing a report from the National Association of Realtors, the Forbes piece also points out that sales of new single-family homes hit the lowest point since July 2013 last month as well. New home sales might be the most disappointing aspect of the current housing market. Purchases of new construction last month severely underperformed analysis consensus according to figures compiled by Bloomberg. That being said, the general sluggishness of home sales overall was coupled with an exceptionally high price tag. According to the Forbes article, the median sales price for a purchased home last month rested at $290,000, the highest monthly tally yet recorded.
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So What to Make of This?
The data suggests that the market remains most difficult for first-time buyers. This is an unfortunate development, since the overall sustainability of the housing recovery rests largely with those seeking their first home. The overall housing market risks stagnation in the case that only older or move-up buyers are drawn to the market. Generally speaking, low-priced homes seem to be moving quickest. Citing a report from Trulia, the Forbes article notes that only 49% of the homes listed at the low end of the pricing scale were one sale two months prior, compared to 53% for mid-range homes and 62% for those in the highest price tier. Additionally, data suggests that activity in the housing market remains regionally segmented. This is typical whether the market is healthy or not, but it seems especially pronounced. Sales of new single-family homes appear to be strongest in the northeast, while sales in the Midwest, west coast, and the south all appear to be lagging. Hopefully this downturn will be temporary, or at least not too detrimental to the long-term health of the housing market. Some commentators have suggested that the slowdown in the housing market might be due to the heavy and prolonged winter, which would be more comforting if the northeastern housing market hasn’t remained the healthiest. Overall, it seems we can hope that the housing market evens off and more young Americans, by whatever means, reach a place of financial security necessary to safely buy new homes.