U.S. Housing Market & Rental Update, Q2 2015 07.11.2015 | Joe Palumbo

Welcome to my quarterly round-up of US housing data:

A quote from Frank Nothaft, Chief Economist at Corelogic, accurately sums up the current “mood” relative to US Real Estate: “The overall economy has provided mixed signals on its performance so far this year, but one thing is clear: Home sales are off to a brisk start through April. We expect house prices in our national index to be up about 5 percent in the next 12 months, and mortgage rates are likely to move higher over the next year.”

To bolster that claim, Corelogic reported the following on June 9, 2015: “The National foreclosure inventory fell by 24.9 percent year over year in April 2015 to approximately 521,000 homes, or 1.4 percent of all homes with a mortgage. This marks 42 months of consecutive year-over-year declines.”

Additionally and supportive of positive market conditions, CoreLogic also reported (June 8) that distressed sales—real estate-owned (REO) and short sales—accounted for 12.1 percent of total home sales nationally in March 2015, a 3.2 percentage point drop from March 2014 and a 1.9 percentage point decrease from February 2015. At their peak, distressed sales totaled 32.4 percent of all sales in January 2009, with REO sales representing 27.9 percent of that share.

Corelogic also noted that eight of the 10 fastest growing new home sales markets are in the South and the fastest growing new home sales market in the U.S. is Nashville, Tenn., where new sales grew by 17 percent over the prior year.

From the National Association of Realtors (NAR):

  • Sales of existing homes in May were at the highest rate in nearly six years and April sales, originally reported down by more than 3 percent, weren’t hit as hard as first thought. If not for the Homebuyer Tax Credit in 2009, today’s numbers would be the highest in more than 8 years. More notably and indicative of a true recovery is a spike in first time home buyers which accounted for 32% of all home sale purchase, highest since September 2012.
  • The median existing single-family home price increased in 85 percent of measured markets, with 148 out of 174 metropolitan statistical areas1 (MSAs) showing gains based on closings in the first quarter compared with the first quarter of 2014.
  • The national median existing single-family home price in the first quarter was $205,200, up 7.4 percent from the first quarter of 2014 ($191,100).
  • The five most expensive housing markets in the first quarter were the San Jose, CA, metro area, where the median existing single-family price was $900,000; San Francisco, $748,300; Honolulu, $699,300; Anaheim-Santa Ana, CA, $685,700; and San Diego, $510,300.

Rental Notables

San Francisco remained the most expensive market in the United States for the ninth straight month, according to the Zumper Report, with median 1-bedroom rents rising to $3,460, the highest ever recorded. The gain was particularly notable considering that NYC, the second most expensive market, saw rents plateau in February, even after a slight drop of 3.2% in January. Boston maintained its third place position, despite a 4.2% drop to $2,300. Rounding out the top five were Washington, D.C., down 0.5% to $2,000, and Oakland, up a strong 5.3% to $1,980.

Big movers upward included Milwaukee, Louisville, and Omaha.

  • Milwaukee, WI, saw the second highest percentage increase last month, up 9.7% to a median of $1,020. Rents have also been up 10.9% quarter over quarter.
  • Louisville, KY, jumped three spots to the 28th most expensive rental city in the US, up 5.2% month over month, and 8% in the quarter to $810.
  • Omaha, NE now has a median of $760 up 4.1% in the month and 8.6% in the quarter.

Down markets included Boston, Cleveland, Columbus.

  • Boston, MA, though still remaining the third most expensive market in the country, saw a drop of 4.2% month over month to a median price of $2,300.
  • Cleveland, OH, dropped two spots to 33rd on the list, down 5.2% last month with price of $730.
  • Columbus, OH, also dipped 5.3% in February, with a median one bedroom of $670.

Major Market update: Houston

The Houston housing market had a mixed bag of indicators in the May 2015 versus May 2014 analysis, with single-family home sales and total property sales down, total dollar volume flat, and prices up to the highest levels of all time. Month-end pending sales for single-family homes totaled 8,127, a 3.0 percent decline versus one year earlier.

Houston’s housing inventory expanded in May to a 3.1-months supply versus the 2.8-months supply of one year earlier. That matches the inventory level of October 2013, but is well below the current national supply of homes which stands at a 5.3-months supply, according to the National Association of Realtors.

Houston Real Estate Milestones in May

  • At $292,040, the single-family home average price reached an all-time record high;
  • At $223,000, the single-family home median price also achieved an historic high;
  • Days on Market for single-family homes were 47 days versus 50 days a year earlier.

At this point, it’s safe to conclude that the impact on the Houston market is null as indicated by just a small uptick in day-on market and inventory while prices rise. The 3 percent decline in pending sales is the only negative but cannot be recognized as meaningful unless the drop continues through summer.

Got questions or comments? Email me.

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Written by Joe Palumbo


Joe Palumbo, SRA, is Vice President of Real Estate Services for Weichert Workforce Mobility. He has over 30 years of real estate experience and has been qualified by the New Jersey and New York State Board of Real Estate Appraisers as an instructor of Residential Real Estate. He is a State Certified Residential Appraiser and licensed Realtor and was named to the New Jersey Board of Real Estate Appraisers in 2011.

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