Weak Home Sales, Falling House Prices | Katonah Real Estate

 

Followers of the housing market got spooked a couple weeks ago by some data suggesting the market was in trouble. First, the recent pending home sales data from the National Association of Realtors showed a 1.1% decline, when economists had forecast a 0.5% increase. Second, the S&P Case-Shiller 20-city house price index declined 0.3% on a monthly basis, when economists had predicted a 0.4% increase. Is it game over for the U.S. housing market?

U.S. housing affordability and homeowner vacancy rates
There’s no doubt that the housing market has slowed from the strong growth it saw in 2013, but that doesn’t mean it’s about to crash. On the contrary, there are four key reasons the market is likely to improve.

First, despite the talk that rising mortgage rates will choke off demand, housing still remains relatively affordable. Take a look at the National Association of Home Builders/Wells Fargo housing opportunity index — the higher the number, the more affordable housing is.

Source: NAHB/Wells Fargo.

Affordability fell in the second half of 2013, but on a historical basis, it’s still supportive of good growth in the housing market. Readers can see that, according to the index, housing is more affordable than it was for most of the 1992-2009 period.

Second, homeowner and rental vacancy rates suggest that the number of houses and rentals available is shrinking. Vacancy rates simply refer to the percentage of properties which are unoccupied. A look at the data from the U.S. Census Bureau demonstrates that rental vacancy rates are falling sharply, while homeowner vacancy rates remain low. The lower the number, the fewer properties there are available to rent or buy

 

 

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http://www.fool.com/investing/general/2014/08/11/weak-home-sales-falling-house-prices-game-over-for.aspx

 

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