There are several indicators that help determine whether or not housing market is in recovery – housing starts, used home sales, the number of days from list to sale, and the drop in inventory relative to the national norm, the latter two of which are often interconnected.
Let’s consider each of these indicators and look at why recent data suggests residential real estate is gradually recoveringon its way to a gradual recovery.
Housing Starts Up
Data regarding housing starts suggests that the housing market may have begun to recover. Starts, which are the number of new-home construction and considered a forward indicator, increased by an annualized rate of 750,000 in August. One thing is for certain, something that remains on the forefront of good value is Miami real estate.
While this number was slightly under the expected 767,000, starts are still up 29% year-over-year. This is evidence that the housing recovery is widening. Single-family homes rose 5.5% over July to 535,000, their highest level since April 2010. And though multi-family homes decreased 4.9% to 215,000 after several months of increases, the combined third quarter moving-average was above both the first and second quarter averages.
Used Home Sales
The news was good here, as well. Sales of existing homes rose 7.8% month-over-month in August to 4.82 million units, far above the 4.5 million that had been estimated. This more than made up for the decline between May and July.
In addition to the 9.5% year-over-year rise in median home prices to $187,000, average prices rose 7.2% to 235,000. Though both came in slightly below the June numbers, the results reinforced the analysts’ estimates that prices at year’s end end higher.
From List to Sale and Relative Inventory Drop
Generally, if it takes 90 or more days to sell a house, and if there is still a hefty inventory of homes for sale compared with the year before, it is likely that prices in that market are rebounding at a slower pace than they are nationally.
On the other hand, if houses in a given area are selling fast – as quickly 30 to 40 days after listing – and the for-sale inventory has declined, it is probable that prices in that market are rebounding more quickly than they are nationally. So emerge such conclusions from the latest analysis of 146 major markets conducted by Realtor.com.
For example, median list prices in Oakland, California, are up 13.6 percent from August 2011, at $385,000. And inventory is down by an amazing 58 percent year-over-year; the median time a listed house stays on the market is just 20 days. By comparison, the national median from listing to sale is 91 days and the median price is $190,000.
Similarly stellar performances are to be found in Denver, Phoenix, and Washington, D.C.
On the other hand, the performance in Philadelphia is a stark contrast, where the median time to sale is 121 days and prices are 5 percent down from a year ago. The news is similar in other such underperforming places like Myrtle Beach, S.C., Asheville, N.C., and Ft. Pierce-St. Lucie, Florida. Even a high-cost resort market like Naples, Fla., continues to suffer, as it takes a median of 132 days to sell a house.
Taken altogether, the signs are there that there is a housing recovery, and that it’s continuing, as gradual as it may be.