In October 2017, the latest month for which statistics have been compiled pending home sales rose by 2% despite the fact that housing inventory dropped by 3.2%. Median house have increased 5.5% in the last year.
According to many experts the laws of supply and demand are pushing homes beyond the reach of many first time home buyers.
Sales had been slightly lower than expected in August and September, due in large part to the hurricanes that ravaged the South. The South accounts for almost half of the existing home sales market. In October sales in the south were up 1.9 percent. There were also gains in Sales n the Northeast, Midwest and West regions.
Existing home sales, which make up 90% of home sales in the United States fell by 3.2% in October. In fact supply overall was down by 10.4 percent.
Housing inventory has declined for 29 straight months on a year-to-year basis. Home builders have not kept pace with the demand citing labor shortages and high raw material cost. Realtor estimates show that housing starts need to be in 1.5 to 1.6 million range to keep pace with demand. Housing starts in October were 1.29 million.
Not only is demand exceeding supply but the number of days on market is tightening from 41 days to 34.
Single-family permits, a reasonable indicator of future construction conditions, are running 10% higher on a year-to-date basis. Part of the gain for single-family construction in October was a rebound in Florida and Texas after project delays in September. Single-family starts in the South were up 17% compared to September.
With respect to housing’s economic impact, 56% of homes under construction in October were multifamily (610,000). As noted in the graph above, with recent production declines for apartments, the current count of multifamily units is effectively unchanged from a year ago. There were 486,000 single-family units under construction, a gain of 10% from this time in 2016.