3 Surprising Things Learned From the Spring Housing Market

June 24, 2016 | By

Summer has officially arrived, but spring data has just started to give buyers and sellers clues about what to expect as the selling season continues.

Some consider the spring and summer seasons a convenient time to enter the market. Buyers are out and about in warmer weather, and the typical school break provides an opportune time for buyers and sellers to pack up and move.

Whether you’re already swimming in the housing market or still thinking about whether to dip your toe in, here are three recent data points to keep in mind:

  1. Home Prices

Home prices are important to potential sellers who want to know what their home might be worth, while they give hints to buyers about what they will pay, says Danielle Hale, managing director of housing research for the National Association of Realtors®.

The national median price for existing homes in April was $232,500, up 6.3 percent from the same month last year, according to NAR. It was the 50th consecutive month of year-over-year gains.

There are many ways to capture housing market values, but many of them seem to show the same trend nationally — home prices continue to rise, says Hale.

Another recently released measure, the S&P/Case-Shiller Home Price Index, showed an increase of 5.2 percent nationally in the 12 months ending in March, down from 5.3 percent in February. Prices are still below their peak levels from the summer of 2006, according to the S&P/Case-Shiller national, 20-city and 10-city indices, but some cities like Dallas are seeing record values for single-family housing.

  1. Supply

The squeeze in housing supply is closely related to the uptick in prices, Fannie Mae’s Chief Economist Doug Duncan says.

Historically, home prices have risen three-quarters of one percent annually on average after inflation, notes Duncan. For the past four years or more, after inflation, they’ve increased between three and four percent.

“There’s much stronger real house appreciation. This comes back to supply,” Duncan says. “And builders haven’t been building.”

At the current rate of overall home sales, it would take 4.7 months without additional housing inventory to clear what’s on the market now, according to NAR. Many economists believe “normal” supply is between six and seven months, says Duncan.

  1. Housing “Tier” Appreciation

A house’s price tag will depend not only on a home’s location but also its type. Where home prices are on the rise, the pace of increase is fastest for lowest-priced homes in many cities, and that makes it tougher for people in the market for starter homes, notes Duncan.

In Denver, for example, homes priced below $298,386 had a 15.83 percent year-over-year gain in March, according to Duncan’s analysis of S&P/Case-Shiller Index data. Homes in the “middle” tier, priced between $298,386 and $418,848, had a 10.83 percent year-over-year gain. “High” tier homes, or those priced above $418,848, had a 6.75 percent year-over-year gain.

In many cities, developers are not building as many homes with lower-revenue points, Duncan says. In some cities in California, for example, it would take only two months to clear inventory at the current sales pace.

“What’s happening there is the absence of available properties,” Duncan says. “The ones that are available are being bid up.”

When the inventory level is below six months, it’s an indication prices are increasing, and it’s a more competitive sellers’ market, says Hale.

“There are more buyers than sellers, which makes a buyer’s life trickier and a seller’s life easier,” she says.

 

Estimates, forecasts and other views expressed in this article should not be construed as indicating Fannie Mae’s expected results, are based on a number of assumptions and may change without notice. How this information affects Fannie Mae will depend on many factors. Neither Fannie Mae nor its Economic & Strategic Research (ESR) Group guarantees that the information in this article is accurate, current or suitable for any particular purpose. Changes in the assumptions or underlying information could produce materially different results. The ESR Group’s views expressed in this article speak only as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

comments

COMMENTING POLICY

 

We appreciate and encourage lively discussions on our websites’ content. While we value openness and diverse points of view, all comments should be appropriate for people of all ages and backgrounds. We do not tolerate and will remove any comment that does not meet standards of decency and respect, including, but not limited to, posts that:

  • are indecent, hateful, obscene, defamatory, vulgar, threatening, libelous, profane, harassing, abusive, or otherwise inappropriate
  • contain terms that are offensive to any group based on gender, race, ethnicity, nationality, religion, or sexual orientation
  • promote or endorse a product, service, or vendor
  • are excessively repetitive, constitute “SPAM” or solicitation, or otherwise prevent a constructive dialogue for others
  • are factually erroneous or misleading
  • threaten the privacy rights of another person
  • infringe on intellectual property and proprietary rights of another, or the publication of which would violate the same
  • violate any laws or regulations

We reserve complete discretion to block or remove comments, or disable access privilege to users who do not comply with this policy. The fact that a comment is left on our website does not indicate Fannie Mae’s endorsement or support for the content of the comment.

Fannie Mae does not commit to reviewing all information and materials submitted by users of the website for consideration or publication by Fannie Mae (“User Generated Contents”). Personal information contained in User Generated Contents is subject to Fannie Mae’s Privacy Statement available here. Fannie Mae shall have otherwise no liability or obligation with respect to User Generated Contents and may freely copy, adapt, distribute, publish, or otherwise use User Generated Contents without any duty to account.

A Window Into Housing In America

Subscribe to our newsletter for each week's top stories. Enter your email address below to stay in the know.