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23 October 2015
 October 23, 2015

Real Estate Market Offering Conflicting TrendsTrends in the U.S. housing market are used as a prominent economic indicator to help economists and government officials determine fiscal and monetary policy. As the real estate market goes, so does the rest of the economy. Unfortunately, the market has been sending conflicting signals since the start of the summer. New home purchases are down on the one hand while housing starts are the highest they have been in years.

For the purposes of clarity, statistics relating to new home sales are confined to existing homes being sold by one owner to another. Housing starts relate to building new homes from the ground up. The differences between the two make it possible for them to be heading in opposite directions, as they seem to be doing right now.

New Home Sales Slowing Down

Through the first half of this year, new home sales were up more than 21% from the same period in 2014. Sales steadily increased from January through the end of May, before slumping again. The Department of Commerce reported a drop in sales of 6.8% in June, with approximately 482,000 transactions completed. They also revised the May number downward to 546,000.

Another cause for concern is that the median price over the last 12 months has slipped by 1.8%. The two trends together suggest that fewer homes are being sold and lower sale prices are being realized. That’s not to say the real estate market is on the ropes as it was from 2008-2010, it is merely evidence that we are experiencing another cyclical decline. No one is yet predicting any sort of real estate crash.

Housing Starts Heating Up

While new home sales seem to be leveling off or slowing down, construction of new houses is moving in the other direction. According to the Department of Commerce, construction of new single-family homes in July was at its highest level in eight years. Builders broke ground on 1.21 million units, up slightly from 1.20 million units in June. Builders have broken ground on more than 1 million units per month for the last four months.

The thing to remember about new-home construction is that it can vary drastically from one region to the next. In the Northeast, for example, housing starts were off 27.5% in July. In the South and West, new-home construction reached record levels last month. Most of the difference has to do with state tax environments and the expiration of building permits in several Northeast regions.

Overall, the U.S. real estate market is holding its own in a slowly rebounding economy. With unemployment dropping and wages gradually increasing, property experts expect the market to sustain adequate growth over the next 12 months.

If you are looking to buy a house in the near future, this is good news. You might consider a purchase this winter in order to take advantage of eager sellers and lower prices, or perhaps wait until next spring when the supply of homes on the market is greater. In either case, we will be here to represent you in your real estate transaction.

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