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Bryon Self - Denver Rent to Own

Your Denver Area Rent to Own Specialist

By Bryon Self | Agent in Castle Rock, CO

Supply-Demand Imbalance Weighs On National Home Price Growth Sustainability

Unsustainable home price growth doesn't necessarily indicate a housing bubble is growing, but unless more homes to sell come to market soon, something's got to give. Lawrence Yun, the National Association of Realtors' (NAR) chief economist says the national housing recovery is gaining momentum but it could hit a wall without more homes to sell.

"The housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent," Yun said.

That's not likely and with higher sales absorbing increases in the supply, resale- homes, also, aren't coming to market fast enough.

"The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth," Yun said.

Housing inventory

The nation's inventory of existing homes for sale, 2.22 million, rose 3.3 percent from April to May, according to NAR.

However, due to increasing sales levels, the 5.2-month supply of homes for sale, dropped to 5.1 months. What's more, listed inventory is 10.1 percent below a year ago, when there was a 6.5-month supply, NAR reports.

Housing sales

Closed sales of existing homes rose 4.2 percent to a seasonally adjusted annual rate of 5.18 million in May from 4.97 million in April. The level of sales is nearly 13 percent above the 4.59 million pace in May 2012.

NAR says existing-home sales are at the highest level since November 2009 when the market jumped to a 5.44 million annual rate of sales as buyers took advantage of tax stimulus.

Sales have remained above year-ago levels for 23 months.

Low inventories and high sales have generated 15 consecutive months of year-over-year home price increases, and six consecutive months of double-digit price increases, according to NAR.

Home prices

The national median home price for exiting homes was $208,000 in May, up 15.4 percent from May 2012, the strongest price gain since October 2005, which jumped a record 16.6 percent from a year earlier.

Distressed homes – foreclosures and short sales – accounted for 18 percent of May sales, unchanged from April, but down from 25 percent in May 2012 and the lowest share since monthly tracking began in October 2008.

Fewer distressed homes, which generally sell at a discount, account for some of the price gain. Foreclosures sold for an average discount of 15 percent below market value in May, while short sales were discounted 12 percent during May according to NAR.

Bubble fears

NAR President Gary Thomas says home price gains remain sustainable because major bubble conditions from the last boom-bust market don't exist. Source Realty Times

For more information on buying Denver homes, selling Denver homes, or Rent to Own Denver homes, please visit the websites at www.MyDenverHomeAgent.com or www.RentToOwnDenverHomes.com. 

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