Realtor.com: July boasts the healthiest end to spring buying season in 3 years

Sunshine over sunflowers

Realtor.com is touting data from July showing that, by its metrics, July shows the best price appreciation and inventory increases hit during the peak spring buying season in three years.

It’s been a rough year for housing overall, but realtor.com’s national housing trend survey says that from April to July, price and inventory increases continued their upward trend untouched by external economic factors. 

“In July 2012 and 2013, we saw external economic factors overwhelm the healthy gains established in the housing market during the spring home buying season,” said Jonathan Smoke, chief economist for realtor.com. “This year, we’re ending the traditional season with high buyer and seller confidence demonstrated by price appreciation, increases in inventory and quick home sales.”

Click the graphic to enlarge.

Realtor.com’s July 2014 national housing data reveals homeowners are more optimistic about selling than in previous years.

This month, the number of homes on the market increased 2.3% compared with last year and increased 4.5% over June. One factor fueling this uptick in inventory is a strong 7.5% increase in median list prices year-over-year.

Despite higher prices and more homes on the market, buyers are snatching up properties faster than last year. Median age of inventory for July 2014 is 82 days, three days faster than 2013.  

“This is the first time, since the beginning of the recovery, that we expect to see positive momentum throughout the second half of the year,” Smoke projected.  “While seasonal patterns are emerging in July month-to-month comparisons, all other metrics point to fundamental market health and a build-up of momentum.”

While July growth may seem modest, it is in stark contrast to the housing indicators experienced over the last two years. In April 2013, mortgage interest rates began to increase significantly, making potential mortgage payments more expensive for homebuyers.

By July 2013, this slow but steady tightening of homebuyer budgets dampened demand. As a result, month-over-month increases in inventory lessened and properties spent more time on market.

In July 2012 concerns of broad debt defaults and economic weakness in Europe influenced big decreases in the stock market. Overall economic uncertainty contributed to weak consumer confidence, which influenced potential homebuyers to remain on the sidelines while low prices made owners reluctant to list.  

As a result, July 2012 median list prices remained flat both month-over-month and year-over-year. Inventory remained at very low levels and homes spent 102 days on the market.

San Diego home appreciation leads U.S.

Homes are lined up near Carmel Valley.

 

San Diego County’s housing market led the nation in price appreciation in February, as the region moved out of its annual holiday homebuying lull.

The S&P/Case-Shiller Home Price Index showed Tuesday that from January to February, prices on the index rose 1 percent, highest on the 20-city measure. Prices declined over the month in 13 of the cities included on the closely-watched index.

“There’s a fundamental housing shortage in San Diego County, it’s that simple,” said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. “We have a strong housing market in San Diego as a result of a shortage. We have demand and a robust economy compared to a lot of other communities.”

The index, which lags two months, measures repeat sales of single-family homes. From February 2013 to February 2014, San Diego home values are up 19.9 percent, trailing only San Francisco and Las Vegas in annual appreciation.

Still, Goldman said he sees the local market continuing to slow, perhaps down to its historical 3 to 3.5 percent annual appreciation level.

The slowing seems to have started. For instance, the index rose from 163.28 in January 2013 to 194.07 in October, hovering around that total the rest of the year. In February 2014, it reached 196.97, highest since it was 197.45 in January 2008, but on the decline in the Great Recession.

Goldman said now that values of recovered, the market is adjusting to a new normal.

“We’re starting to see shifts in different consumption habits of homebuyer,” he said. “We’re seeing a lower desire to jump into the housing market, we’re seeing slower household formation, people are living at home longer, people are pooling resources instead of running out and jumping into that house. People are much more careful about their home-buying decision.”

David Blitzer, chairman of the index committee at S&P Dow Jones, also said despite price gains in much of the country, the market is slowing. That’s exemplified by fewer sales, housing starts, and the fact that home prices haven’t made it back to their 2005 levels. Blitzer also notes that mortgage rates have remained steady since they jumped last May, hitting affordability amid concerns over consumer confidence and tighter qualification standards.

“Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing,” Blitzer said in a statement. “Long overdue activity in residential construction would be welcome, but is certainly not assured.”

The average rate for 30-year-fixed mortgage in February was 4.3 percent, up from 3.53 percent in February 2013, Freddie Mac reports.

DataQuick, another real estate tracker, reported in February that San Diego County’s median home sale price was $410,000. It rose to $427,000 in March.

Las Vegas had the highest year-over-year gain on the index, at 23.1 percent, while San Francisco was second with 22.7 percent appreciation. Both were about flat from January to February. In Cleveland, where prices declined 1.6 percent from January to February, annual appreciation was 3 percent, slowest on the 20-city index. 

 
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