Sept. 20, 2012 – August’s better-than-expected existing-home sales data contain a number of signs that indicate the housing market recovery is solidifying, said NAFCU Staff Economist Curt Long.
Released Wednesday, seasonally adjusted data from the National Association of Realtors show existing-home sales jumped 7.8 percent in August on a monthly basis and 9.5 percent on a year-over-year basis to 4.82 million units, annualized. “That was the fastest monthly sales pace since 2010,” noted Long.
The pace of sales drove inventory levels down from 6.4 months of supply to 6.1 months. “Analysts consider six months of supply to represent a roughly even balance between supply and demand,” Long noted.
Another sign that the housing market is on the mend, according to Long, is that median prices have increased on a year-over-year basis for the past six consecutive months. “The last time we saw that happen was in 2006,” he noted. “A big factor in the price appreciation is the drop in the share of distressed sales, which declined from 31 percent in August 2011 to 22 percent in August 2012.”
While the report reinforces NAFCU’s view that the housing market recovery is firming, there are still a number of downside risks. “If we see a backlog of distressed homes hitting the market, that would likely cause prices to drop and the housing recovery to slow,” Long said.
For more, view NAFCU’s Macro Data Flash.