Prices Way Up, Pending Home Sales Continue to Surge
Home prices across the nation posted their strongest year-over-year gain in nearly seven years – except for the Midwest. Case-Shiller Indices showed home prices rose year-over-year in all 20 of the cities in the survey in February. Prices rose in 11 of the 20 cities in February over January while falling in 8. Prices were unchanged in Atlanta.
The National Association of Realtors (NAR) reported the median price of an existing single family home rose 1.5% and was up 11.3% from February of last year. NAR also reported a 1.5% increase in the Pending Home Sales Index (PHSI) to its highest level in almost three years.
The Census Bureau reported contracts for the sale of new homes increase 1.5 percent to 417,000 in March. Both the new home sales and pending home sales reports measure contract signings and are designed to be forward-looking indicators.
But back to home prices. The February NAR report showed a distinct regional pattern in home prices. That is that they actually aren’t actually increasing in the Midwest. The only four Midwest cities in the survey saw a decline, while the rest of the country is largely seeing a strong improvement. Both the 10-city index and the 20-city index have seen the highest increase in home prices since September 2010.
Phoenix led the year-over-year gains followed by San Francisco, Las Vegas, Atlanta, Detroit, Los Angeles, Minneapolis, Miami, San Diego and Tampa. The report shows a steady improvement in the West, particularly in Silicon Valley. The Bay Area has largely been excluded for nation-wide trends largely because of the booming technology industry. This holds true for sales of new homes as well. Silicon Valley homes are often only on the market for a day before they are snatched up – often for cash.
NAR chief economist Lawrence Yun continues to blame tight inventories for the slowing sales pace. He says, “Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply. Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses. Job additions and rising household wealth will continue to support housing demand.”
What is the market telling you about your position in the housing recovery?