June 24, 2013 – A trend in motion is likely to stay in motion……. This adage continues to be true in the mid year housing reports. As reported in past blogs, builders have been huge beneficiaries of the chronic lack of existing home supply for sales in markets all around the country. This will change, but the question remains a simple one: “When?”
National housing reports for June, 2013 show that new home sales surged by a record amount, up 8.3% to a level not seen since May, 2008. My sense is that the local numbers will reflect this trend. Meanwhile, existing home sales dropped 1.2% as the mysterious unwillingness of home sellers to list their homes for sale continues. With prices rising quickly, I have expected more listings to hit the market, but that is still not the case. Home builders and developers continue to cheer this trend, as the lack of competition from existing homes is allowing them more pricing power and greater volumes.
Buyers have poured into new developments in large part because there is nowhere else to go. Potential sellers should note that this upward price trend, which I have predicted for the last two years, is very likely to level off in the near future. The window of opportunity for a quick sale may not be open for as long as you expect nor be as wide as you expect once potential sellers decide that it is a good time to move on. There will be a more normalized flow of new listings; it is not a question of “if”, but a question of “when.”
Chartered Financial Analyst, CFA