Housing Markets with the Biggest Price Rebounds Still Lag in Construction Activity Asking prices on homes listed for sale rose 11 percent year-over-year, and 1.2 percent month-over-month in August, according to the latest findings from the Trulia Price Monitor. However, a closer look at the quarterly changes in asking home prices reveals a downward trend that’s much less volatile than the monthly changes suggest. Quarter-over-quarter, asking home prices rose 3.1 percent in August, down from 3.2 percent in July and 4 percent in April. And this downward slope will likely continue as mortgage rates rise, inventory expands, and investor interest declines. A full housing recovery requires rebounds in both prices and new construction. Rebounding prices normalize the housing market by lifting homeowners back above water and encouraging them to sell. Meanwhile, construction activity signals that a housing market is no longer flooded with empty homes. Despite the fact asking home prices are up, construction activity still isn’t back to its normal level yet: construction permits in 2013 are around just 60-70 percent the average levels seen between 1990 and 2012. Among housing markets where asking home prices rose more than 20 percent year-over-year, construction was less than half the normal level in Las Vegas, Sacramento, Riverside-San Bernardino, Warren-Troy-Farmington Hills, and Detroit. Only Orange County and San Jose were at or above normal construction levels
Posted on: Thu, 19 Sep 2013 23:47:02 +0000