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Highlights:
- Case Shiller data showed the first annual increase in June while other data series show a continued 4 to 5 months of annual increases.
- NAR data for July show the typical end of summer slowdown as prices dipped somewhat from June.
- New home prices continue to fluctuate greatly due to low levels of construction and purchase activity; presently new home prices show some weakness.
- Distressed sales, which hold back existing home prices, comprised only 25 percent of sales in a recent survey of Realtors - down from 40 percent in early 2011 to the lowest level since the data began to be collected. While there are still notable numbers of distressed sales due to increasing overall sales, this reduction of distressed sales share is a positive sign for prices.
Outlook:
- From a broad perspective, many of the same stabilizing trends continue to drive the outlook, though low inventories have taken the lead role in recent months. Low inventories and strong buyer demand seen in strong foot traffic helped boost prices in recent months. If supply slows more than demand going into the seasonally slower fall months, tighter conditions could continue to push prices up.
- Very limited new construction means that buyers initially searching for a new home may find more selection among existing homes despite tight inventory. Housing permits and construction are higher, but are still at low levels, so new supply is not expected to add downward price pressure anytime soon.
- Affordability remains high, and rising apartment rents may make a home purchase the more affordable option for some households in spite of the oft-cited generational shift away from housing. This would add to the positive trend for sales and prices.
Next Release: September 28, 2012