Existing-home sales are up 2.1 percent in October from the previous month and home prices are up more than 11 percent from this same time last year, to $178,600. Sales are being driven by strengthening fundamentals—the improving jobs picture, rising rental rates, continuing low interest rates and housing affordability—and prices are gaining on reduced supply.
NAR Chief Economist Lawrence Yun said yesterday in his national press conference in Washington to release the association’s latest sales figures says inventory shortages are cropping up in markets across the country. Although that’s good for home price gains in the short-term, in the long-term it’s a negative that reflects weak home construction by builders. Ideally, supply growth will increase to provide a healthy counterbalance to demand so prices can rise at a sustainable pace.
In any case, due to the steady price gains home owners have seen, total home owner equity has risen by $760 billion so far this year. Should home prices rise 5 percent for the year, equity gains could reach $1 trillion by year’s end, a healthy development for the economy, Yun says.
Yun talks about the latest home sales figures and looks ahead to 2013 in the video above of his press conference.
Access NAR’s press release on the latest home sale numbers.