Despite labor shortages, tentative demand, and a sluggish tempo to the market in the past year, builders still have reason to celebrate as the new year begins.
Housing Demand is Up
Redfin is reporting that September was their best month since they began tracking housing demand in 2013. Mortgages hit a low, and as a result, buyer interest was up 4.3% from the previous month. Offers were up 8.2% from the previous year.
However, trouble longer-term trends will call out for course correction in the coming year.
Struggling Inventory
In October the number of homes for sale took another tumble: down 12.2% year over year. The tight inventory—3.1 months supply, almost half of the established benchmark of 6 months– indicates the market remains deeply tilted in favor of sellers; the market has not been in buyer’s favor since January 2012. The average home spent 44 days on the market this fall.
A New Housing Bubble?
Meanwhile the investment experts at Seeking Alpha wonder if we’re on the brink of a housing bubble. They cite rising home prices as a key factor in their concerns. They have also observed behavior that presaged the last housing bubble, notably investors flipping houses. Their intensive borrowing, the total amount of flipping, and flipping volume to sales, are all also warning signs. But we have not yet entered the critical second phase of their bubble evaluation process. It remains to be seen whether more troublesome trends will develop.
Despite potential trials, next year looks bright. Stay tuned for our preview of 2018, and the trends that will shape the market in the coming year.