The National Association of Realtors reports home sales up 10.4% in July of 2012 compared to July 2011. The median sale price was up to $187,300.
Unemployment was also up in July. So if there are fewer people working able to qualify for a home purchase, the rising number of home sales has to be due to record low interest rates and pent up demand. That and investors snatching up short sales and foreclosed properties.
Lawrence Yun chief economist for the National Association of Realtors said; “However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”
Yun is asking GSE’s to release foreclosed properties especially in areas where the inventory is tight. Yun blames a tight supply for the West not joining the party of increasing home sales. Nationally there is a 6.4 month inventory for sale, however millions remain lurking in shadow inventory yet to hit the market.
The pace of sales nationally is up to 4.47 million homes, up from a pace of 4.05 in July of 2011. Yun claims that 5.6 million sales, a normal pace, could be achieved without the tighter lending guidelines and tight inventory. Seems sales regularly exceeded 6 million pre-recession. 5.6 million must be the new norm?
I wouldn’t be going out and doing a happy dance just yet. Even compared to the new norm home sales are off by 21%. The happy dance about prices rising five consecutive months to $187,300 is placed in perspective when in March of 2007 the record high median sale price was set at $262,600 (according to the census bureau).
The association of Realtors, and the Obama supporting liberal press can do all the happy dances they want but this surge in home sales is temporary. If interest rates rise, which isn’t likely in near term, or when pent up demand is satisfied the dance will be over without job creation.
If Obama wins reelection there won’t be anybody dancing in the real estate industry. Obama has no plan that would allow job growth in the private sector except more of the same; more stimulus, more debt, and higher taxes. Must be out to prove Einstein 100% correct. Besides Obama said the private sector is fine, we just need more government jobs.
The unwritten reason why home sales are surging is fear. The American people aren’t stupid, at least the majority of them, and they recognize not only the historical opportunity for cheap money, they also recognize they can lock in a low cost for their housing and protect themselves in frightening economic times.