Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders. Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges.
Closed Sales increased 5.1 percent for existing homes and 5.5 percent for new homes. Pending Sales increased 11.1 percent for existing homes but decreased 17.2 percent for new homes. Inventory decreased 3.1 percent for existing homes but increased 7.0 percent for new homes. The Median Sales Price was up 4.1 percent to $190,000 for existing homes and 4.8 percent to $366,725 for new homes. Days on Market decreased 14.0 percent for existing homes but increased 3.4 percent for new homes. Supply decreased 4.3 percent for existing homes but remained flat for new homes.
While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research-based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.
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*Information provided courtesy of KCRAR and Heartland MLS