Supply and demand troubles have been constant burdens on the housing market's recovery, and Ten-X.com (formerly Auction.com) predicts that existing-home sales will be affected by the lack of options in the market.
Existing-home sales have been on a series of highs and lows since the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule.
The existing-home sales report from the National Association of Realtors (NAR) proves that lenders are well on the path to recovery from TRID delays. The report found that existing-home sales increased 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December. Existing sales are now 11.0 percent higher than a year ago, the highest annual rate in six months and the largest year-over-year gain since 16.3 percent July 2013.
Ten-X's Residential Real Estate Nowcast shows that existing-home sales for February 2016 are expected to fall between 5.23 and 5.58 million annual sales, with a targeted number of 5.4 million. This number is up 10.4 percent year-over-year, but down 1.3 percent month-over-month.
"Following the temporary market setbacks brought on by the implementation of the CFPB’s ‘Know Before You Owe’ rules, the latest sales figures indicate that housing is starting off the year on solid ground,” said Ten-X Chief Economist Peter Muoio. “Several positive underlying fundamentals–particularly a stronger labor market and improved household spending power due to reduced energy expenses–should lead to a rise in home sales despite growing global economic concerns and relatively weak GDP growth.”
According to the NAR, the median existing-home price in January was $213,800, up 8.2 percent from last January's median price of $197,600. Housing inventory rose 3.4 percent to 1.82 million existing homes available for sale, but is still 2.2 percent lower than a year ago when inventory totaled 1.86 million. Inventory levels remain low at a 4.0-month supply, up slightly from 3.9 months in December 2015.
Ten-X forecast that sales prices for existing homes will fall between $209,607 and $231,671 in the month of February with a targeted price of $220,639. This will mark a 9.3 percent year-over-year increase.
“Constrained inventory will continue to limit the recovery of the housing market, and it doesn’t seem likely that we’re going to see a surge in the number of homes for sale as the spring home buying season approaches,” said Ten-X Executive Vice President Rick Sharga. "As demand appears to be growing–especially in certain geographies–prices are likely to rise, impacting affordability, and leaving homeownership just out of reach for many would-be buyers.”