WASHINGTON (September 5,
2012) – A new measure shows the typical amount of time it takes to sell a home
is shrinking, and for traditional sellers is now in the range of historic norms
for a balanced market, well below the cyclical peak reached in 2009, according
to the National Association of Realtors®.
The median time a home
was listed for sale on the market1 was 69 days
in July, down 29.6 percent from 98 days in July 2011. The median reflects
a wide spectrum; one-third of homes purchased in July were on the market for
less than a month, while one in five was on the market for at least six months.
Lawrence Yun, NAR chief
economist, said there is a clear relationship between inventory supply and time
on market. “As inventory has tightened homes have been selling more
quickly,” he said. “A notable shortening of time on market began this
spring, and this has created a general balance between home buyers and sellers
in much of the country. This equilibrium is supporting sustained price
growth, and homes that are correctly priced tend to sell quickly, while those
that aren’t often languish on the market.”
At the end July there was a 6.4-month supply
of homes on the market at the current sales pace, which is 31.2 percent below a
year ago when there was a 9.3-month supply.
There are consistent and
related findings between annual consumer research in NAR’s Profile of Home Buyers and Sellers, and sets of
data in the existing-home sales series, that show current market conditions are
comparable with median selling time in balanced markets.
In periods where the existing-home sales
series averaged close to a 6-month supply of homes in listed inventory, which
is near the low end for market equilibrium, the home buyer and seller series
showed a median selling time of just over six weeks.
In such balanced market conditions, home
prices generally rise 1 to 2 percentage points above the overall rate of inflation
as measured by the Consumer Price Index.
“Our current forecast is for the median
existing home price to rise 4.5 to 5 percent this year and about 5 percent in
2013, which is somewhat stronger than historic norms because of the inventory
shortfall that is most pronounced in the low price ranges,” Yun said. CPI
growth is projected at 2.1 percent for 2012 and 2.3 percent next year.
From 1987 through 2011,
analysis of the NAR Profile of Home Buyers and Sellers series
showed the typical time on market was 6.9 weeks, while the existing-home sales
series showed an average supply of 7.0 months, just above the high end for a
balanced market.
The new measure of days on market shows a
longer selling time than the historic findings which measured traditional
sellers of non-distressed homes. The new series include short sales that
typically took three months or longer to sell. “Factoring out short
sales, the median time on market for traditional sellers appears to be in the
balanced range of six to seven weeks,” Yun explained.
During the peak of the
housing boom in 2004 and 2005 when inventory supplies were historically low,
averaging 4.3 months2 over the two-year peak
period, the median selling time was 4 weeks. Prices in that time frame
were bid up and rose at an annual rate of 10.3 percent, historically higher
than the 3.1 percent average growth in CPI during the period.
In the economic downturn, time on market for
non-distressed sellers peaked at 10 weeks in 2009 with a 10.0-month annualized
supply. The median price fell 12.9 percent that year, which was the
biggest annual decline on record.
“Ironically, if housing construction doesn’t
pick up to normal levels within two years, supply shortages could be sustained
for an extended period and lead to above average appreciation,” Yun said.
“Therefore, any unnecessary hindrance to housing starts, such as excessive
local zoning regulations or stringent bank capital rules for construction
loans, should be carefully re-examined.”
The National Association of Realtors®, “The
Voice for Real Estate,” is America’s largest trade association, representing 1
million members involved in all aspects of the residential and commercial real
estate industries. Read Full Article HERE
Source: Realtor.org
