MARKET TRENDS: Homes selling more quickly, says real estate group
In another sign that the nation’s housing market is recovering, the time it takes to sell a home is shrinking, according to theNational Association of Realtors.
The median time a home was listed for sale was 69 days in July, down nearly 30 percent from 98 days in July 2011. NAR began tracking days on market in May of last year. From May through July of 2012 his year, market time averaged 70 days, down from 97 for the same period last year.
“As inventory has tightened homes have been selling more quickly,” said Lawrence Yun, NAR’s chief economist in a statement. “A notable shortening of time on market began this spring, and this has created a balance between home buyers and sellers in much of the country.”
Realtors say there’s a direct relationship between inventory and time on market. At the end July, there was a 6.4-month supply of homes, 31 percent below a year ago when there was a 9.3-month supply.
In periods where home sales averaged close to a 6-month supply of homes in the inventory, the median selling time was just over six weeks, NAR said. In such balanced market conditions, home prices generally rise up to 2 percentage points above the inflation rate as measured by the Consumer Price Index.
Realtors forecast median existing home price to rise up to 5 percent this year and next, which is somewhat stronger than historic norms because of the inventory shortfall that is most pronounced in the low price ranges, Yun said. CPI growth is projected at 2.1 percent for 2012 and 2.3 percent next year.
From 1987 through 2011, NAR found that the typical time on market was 6.9 weeks, while the average supply of homes was 7 months. During the housing boom in 2004 and 2005 when inventory supplies were historically low, averaging 4.3 months, the median selling time
was four weeks. Prices back then rose at an annual rate of 10.3 percent, historically higher than the 3.1 percent average growth in CPI during the period, NAR said.
In the economic downturn, time on market for non-distressed sellers peaked at 10 weeks in 2009 with a 10-month annualized supply. The median price fell 12.9 percent that year, which was the biggest annual decline on record.
“Ironically, if housing construction doesn’t pick up to normal levels within two years, supply shortages could be sustained for an extended period and lead to above average appreciation,” Yun said. “Therefore, any unnecessary hindrance to housing starts, such as excessive local zoning regulations or stringent bank capital rules for construction loans, should be carefully re-examined.”