Housing Is Better but Not Yet a Goldilocks Market
NEW YORK (TheStreet) -- April's first big piece of home-sales data is out, and it looks pretty good.
Existing-home sales rose 1.3% in April, from March, to an annual rate of 4.65 million units, the National Association of Realtors said.
That's a little short of the average forecast of 4.69 million homes but within the range of expectations. March sales were not revised, and remain at an annual pace of 4.59 million units.
The two best things: a 4.1% jump in sales in the western U.S., and an increase in the number of homes for sale.The gain out West matters because the West's recent slowdown had been so mystifying, raising concerns about yet another hiccup in the start-stop recovery. Because the polar vortex this winter didn't visit the Pacific states, the slowdown in home sales in the first quarter in places like California raised concerns that the rebound in home prices, plus a gain in mortgage rates in the last year, was cutting into sales. Those gains have pushed the prices of buying a home in some markets close to, or even above, the cost of renting, and led to overvalued homes in markets such as Los Angeles, San Francisco and Miami, according to Trulia.com.
The 16.8% increase in inventories to 2.29 million homes for sale is another sign that sellers' finances are improving, and that people are looking to move up. It is fairly powerful evidence that concerns about the 9.7 million homeowners who still owe more on their homes than they are worth -- a figure that's down by 40% since 2012 -- isn't keeping housing from continuing to recover.
The fundamentals of housing remain: Renting is cheaper than buying in all but a relatively few (but large) markets. Affordability is quite good, with the average first-time buyer making about 15% more than needed to buy the median-priced home nationally, according to the Realtors' group. The last piece is the job market -- which was excellent in April.
The next two big pieces of data that affect housing are Friday's report on new-home sales, and, of course, the jobs report for May on June 6. If jobs are solid, and affordability remains in good shape, the rest will slowly take care of itself. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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