Existing home sales beat expectations with a climb to 5.71 million units, seasonally adjusted annualized (SAAR).
Econoday calls this an acceleration, is that what's happening?
The resale market, after a period of steady sales, is now accelerating to new expansion highs. Existing home sales rose a very sharp 4.4 percent to a higher-than-expected annualized rate of 5.710 million. This is the best rate since February 2007. Both components show strength with single-family sales up 4.3 percent to a 5.080 million rate and condo sales up 5.0 percent to a 630,000 rate. And year-on-year sales are moving higher, up 5.9 percent divided between 6.1 percent for single-family homes and 5.0 percent for condos.
The month's gains aren't tied to concessions as the median price rose 3.6 percent to $236,400 for a year-on-year rate of 6.8 percent that matches well with the sales trend. Supply, up 5.8 percent in the month to 1.830 million, moved into the market but was absorbed by rising sales which kept supply relative to sales unchanged at 3.8 months. The lack of supply and heated sales pace are reflected in days on the market which are down to 34 from 45 in the prior month and 47 days a year ago.
Housing contributed to last year's economy but never kicked into top gear, which is what this report is hinting at. Watch on Tuesday's calendar next week for new home sales which in the previous month shot higher much like today's report.
Steady Upward Trends Since January 2014
Unfortunately, the data on Fred, the St. Louis Fed repository, only goes back to 2012.
Acceleration is best thought of as an increase in the rate of change. Race car driving provides a nice example as does gravity (the speed at which an object falls over time). Other than random fluctuations, there is no acceleration, just a steady linear trend.
Sales in February 2007 were at a rate of 5.79 million units according to Mortgage News Daily.
Thus, after 10 years, we are back to pre-recession levels.
Comments from Lawrence Yun, NAR Chief Economist
- "The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month," he said. "Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does."
- "Bolstered by strong consumer confidence and underlying demand, home sales are up convincingly from a year ago nationally and in all four major regions despite the fact that buying a home has gotten more expensive over the past year."
- "Last month's swift price gains and the remarkably short time a home was on the market are directly the result of the homebuilding industry's struggle to meet the dire need for more new homes. A growing pool of all types of buyers is competing for the lackluster amount of existing homes on the market. Until we see significant and sustained multi-month increases in housing starts, prices will continue to far outpace incomes and put pressure on those trying to buy."
Real Homes of Genius
The "dire need for new homes", if indeed accurate, which I doubt, can be attributed to the fact that builders cannot build and price cheap houses to make a profit.
Dr. Housing Bubble provides an excellent example in Real Homes of Genius, including pictures of tiny homes listed for close to $500,000 in the Los Angeles area.
Today we salute you Los Angeles with our Real Homes of Genius Award. When half a million dollars isn't worth moving a trash bin:
3525 Portola Ave, Los Angeles, CA 90032
2 beds 1 bath 572 sqft
This place is tiny. 572 square feet.
I actually like the trash can being left in the picture overfilled with crap to show you a better perspective on how small this place is. The ad is written in beautiful prose that really makes your heart jump with joy:
"Why Rent when You Can Buy! This House Features 2 Bedrooms and 1 bathroom with lots of potential especially for a First Time Home Buyer. Great Location close to Downtown Los Angeles, centrally located near Schools, Parks and Shopping. This house has been nicely upgraded."
So let us take a Google Street View here:
More trash cans! One trash can looks like it is crossing the road or gearing up to strike a pose for another realtor's ad. Now some might say "hey, this is a working class neighborhood!" And to that I would say, of course it is! That is why it is so mind numbing to see this tiny place listed at $470,000.
Top Gear? As Good as it Gets?
Econoday says the report hints at being in the "top gear"
If this is the "top gear", is this as good as it gets?
Let's hope so!
Those paying crazy prices will regret it every bit as much as they did in 2006.