August 2018

Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders. Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges. 

 
Closed Sales were up 8.0 percent to 3,802. 
 
Pending Sales increased 19.0 percent to 3,731, and Inventory shrank 18.0 percent to 8,059. 
 
Median Sales Price was up 9.0 percent to $179,000. Percent of Original List Price Received increased 0.3 percent to 96.2%. Absorption Rate was down 18.8 percent to 2.6. 
 
While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research-based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.