New Observations estimates excess inventory for sale equals 1.4 million units with over 4-million homes on-the-block, a figure hovering just 11 per cent below peak-crash inventory, while at the very same time the realtors’ chief economist forecast Monday that “the housing price correction appears essentially over.” [Click charts to see larger versions]
A respectable 521,000 units sold in April, yet inventory for sale increased by 418,000 units. On average inventory is 2.66 million units and currently 4.04 million homes are for-sale (Please see the chart nearby of units for sale. The red line represents an average. Click image for a large view.).
Inventory increased to 8.4 months of supply versus the long-run average of 5.8 months and the recent low of 6.5 months last November. The crash high inventory was 11.3 months in April 2008.
“Although inventory levels remain above normal and much of the gain last month was seasonal, the housing price correction appears essentially over,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR). “In fact, a majority of the markets have seen price gains recently. A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles.”
Last week the Mortgage Bankers Association said that a record 4.63 per cent of homes are in foreclosure. Foreclosures are a major contributor to falling prices.
On the positive side of the ledger, interest rates are outstanding right now and affordability has dramatically improved following a 30 per cent national loss in home prices which started four years ago.
The national median existing-home price was $173,100 in April, up 4.0 per cent from April 2009. Distressed sales accounted for 33 per cent of the total and all-cash sales clocked in at 250 per cent of their normal tally.
“Buyers are focused on finding the right house and taking advantage of favourable affordability conditions,” said Vicki Cox Golder, NAR president and owner of Vicki L. Cox & Associates. “For many buyers, owning a home is a lifestyle choice. They want a place of their own to raise a family, build memories, and be part of a larger community.”
Nearly 10 per cent of current mortgage borrowers are seriously delinquent, being 90-days late or more. New Observations estimated last week that a minimum of one in 10 mortgage borrowers will lose their home to the bank in a distressed sale or foreclosure in the next two years.
Our real estate market rests on a razor’s edge. On the edge lie high mortgage delinquencies, 12 million homeowners who have no equity or negative equity, high unemployment stuck at 10 per cent, an unprecedented loss in house values following a bubble greater by far than any in the last 120 years, and a frightened Fed and Treasury who literally own the new mortgage market in the United States. Predicting that we are done with falling prices may end up landing the speaker north of reckless. Desperation hides behind a mask of confidence.
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