There are several signs indicating that a U.S. housing market crash is already here, but the bulls keep finding reasons to celebrate and live in denial that all’s well in this space. The National Association of Realtors (NAR), for instance, has just released a report that says home prices rose in 93 percent of the metro areas in the U.S. in the third quarter of 2019.
An overwhelming majority of metro areas experienced price gains with very limited inventory growth in the third quarter of 2019. t.co/oU0lNPzMZT
— National Association of REALTORS® (@nardotrealtor) November 7, 2019
But NAR’s report was laced with caution as the body probably fears that the U.S. housing market is already in a state of decline.
NAR’s cautious view on the state of the U.S. housing market raises a red flag
The NAR pointed out that the median price of single-family homes increased in 166 of the 178 markets the association measures, up from 91 percent of the markets that showed growth in the second quarter. The median price of a single-family home in the U.S. came in at $280,200 during the quarter. That’s a 5.1 percent jump over the prior-year period’s median price of $266,500.
But this is where the good news for the U.S. housing market ends. The Commerce Department had reported last month that the median price of a new home was down8.8 percent in September to $299,400 as compared to the prior-year period. The month-over-month decline was also severe at 7.9 percent.
Sales of both new homes and existing homes were also down in September, indicating that a U.S. housing market crash has already arrived. So, the third-quarter report from NAR does not reflect the true health of the U.S. housing market as things have already started going south. And the ironic thing to note is that NAR gave slight hints of a slowdown in its report.
NAR chief economist Lawrence Yun said:
Unfortunately, income and wages are not rising as fast and will make it difficult to buy once rates rise.
He was pointing out that low mortgage rates helped the U.S. housing market last quarter. But the lack of new homes for sale could knock the wind out of the market and price buyers out. Yun added:
In some markets, yes, we’re seeing construction companies ramp up plans to build more houses. But in an overall comparison of 2019 and 2018, fewer homes have been built. So hopefully home builders will expand their plans in order to better address the national inventory shortage.