The housing market’s one problem could be a doozy
WASHINGTON – U.S. home sales are climbing. Prices are rising, too. So the outlook for the housing market is golden, right?
A series of reports released Tuesday pointed to potential cracks in the foundations of America’s residential real estate market.
On the one hand, job growth and low mortgage rates have fueled demand and boosted sales to levels that were last glimpsed in the waning months of the housing bubble nine years ago. Those gains could spur more construction and additional spending on furniture and renovations that could help lift the economy.
Yet the number of homes for sale has fallen. With demand for homes up and supply down, prices have risen faster than incomes. Because many homes have become unaffordable for would-be buyers, further gains may be unsustainable.
“The real takeaway from the numbers is that despite demand being high, the future is looking somewhat muted for homebuyers,” said Ralph McLaughlin, chief economist at the real estate firm Trulia.
This mismatch between supply and demand arrives at a delicate moment. Global pressures have roiled the stock market and hurt exports. That has meant that the economy must lean more heavily on consumers — including homebuying — to extend its 6½-year-old recovery from the Great Recession.
A snapshot of the housing market points to some concerns:
– Sales of existing homes rose 0.4 percent last month to a seasonally adjusted annual rate of 5.47 million, the National Association of Realtors said Tuesday. Those gains build on a strong 2015. Sales last year reached a nine-year peak, evidence of healthy demand that has led some economists to predict that the real estate sector will keep improving.
But the report also shows a shortage of available homes. The number of home listings in January fell 2.2 percent from a year ago. The result is that buyers shopping for homes have fewer options and must pay elevated prices. The median home sales price was $213,800 in January, an 8.2 percent annual increase from a year ago.