The Mortgage Bankers Association (MBA) recently released a chart that highlights the existing-home sales in a historical context. The graph reveals that the rate of housing turnovers, while improving, are not up to ‘normal’ rates.
The MBA graph shows that housing markets are recovering, but are still weak. The turnover rate rests slightly above 7 percent currently in the second quarter, an amount that falls short of a ‘normal’ rate of 7.5 percent, but still surpasses the recent low of 4.8 percent from the third quarter of 2010.
The housing turnover rate is calculated by dividing existing home sales by estimates of the owner-occupied housing stock. MBA also uses existing-home sales data from April and May to estimate the turnover rate for the second quarter of 2015 and sales data include single family, cooperative and condominium housing.
“Home sales are being supported by improving labor markets, but mobility remains relatively constrained by the remaining ten percent of households with negative equity, by lingering caution on the part of existing owners who have hesitated to become move-up buyers, and by still tight credit conditions,” MBA said.
This week, the National Association of Realtors (NAR) released a report finding that first-time buyers are flooding the housing market, driving the total number of existing-home sales for May up. May home sales experienced a growth spurt following April's decline and are now at their highest pace since November 2009. All major regions experienced sales increases in May, led by the Northeast. This month’s increase was the largest increase since late 2009.
According to NAR, total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, increased by 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May from an upwardly revised 5.09 million in April. Sales have now seen increased year-over-year for eight consecutive months and are 9.2 percent (4.90 million) above a year ago.
"Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers," said Lawrence Yun, NAR’s chief economist. "However, overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation. Without solid gains in new home construction, prices will likely stay elevated—even with higher mortgage rates above 4 percent.”
Source: NAR, Census, MBA