Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders.
Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges.
- New Listings decreased 5.0 percent for Single Family homes but increased 19.5 percent for Townhouse/Condo homes.
- Pending Sales decreased 20.0 percent for Single Family homes and 18.1 percent for Townhouse/Condo homes.
- Inventory decreased 4.1 percent for Single Family homes but remained flat for Townhouse/Condo homes.
- Median Sales Price increased 6.6 percent to $239,900 for Single Family homes but decreased 1.5 percent to $157,500 for Townhouse/Condo homes.
- Median Time to Contract increased 14.3 percent for Single Family homes and 25.8 percent for Townhouse/Condo homes.
- Months Supply of Inventory were dead even with last year for both property types.
While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research-based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.