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Home Prices Rise 15% As Inventory Growth Lags

Written by on Wednesday, 10 July 2013 7:00 pm

The housing recovery continues to hum along, cranking out ever increasing home prices, even as inventories grow.

Unfortunately, inventories aren't growing fast enough to stem the tide of rising home prices and decreasing affordability.

Still, there's some hope for a buyer's market before the year is out, according to online brokerage's State of the Real Estate Market July 2013 report, which covers the June 2012 to June 2013 period.

Across 38 cities Movoto tracks, the list price per square foot increased by an average 15 percent, rising from $158 in June 2012 to $181 by June 2013.

The list price per square foot increased for 36 of the 38 cities Movoto tracks.

The per-square foot price increased from $179 in May to $181 in June, even as inventories rose, just not fast enough, Movoto reported.

During the same month-to-month period, inventories were up for the second month in a row, but only by 3,574 properties across Movoto's 38-city database - a drop in the bucket.

On a year-over-year basis, 32 of the 38 cities Movoto tracks continued to see a drop in total inventory. Overall, the total inventory dropped by 20.5 percent over the past year, decreasing the supply by more than 24,000 homes.

However, Movoto says, if the month-to-month trend of rising inventory holds, prices could begin to level off or even fall over the next several months.

That would be surprising, but it would help counteract rising costs associated with higher mortgage interest rates .

Mortgage interest rates have risen a full percentage point or more in recent months.

While higher mortgage rates might prompt more homebuyers to rush to market to head off still higher rates, the one percentage point recent increase in rates has already priced some buyers and refinancing homeowners out of the market.

State of the Real Estate Market July 2013 by Movoto

City breakdown

Here's some of the up and down highlights from some cities in Movoto's July report for the month of June.

Sacramento - One of the nation's hottest recovery markets, Sacramento has enjoyed more than a 68 percent increase in the price per square foot over the past year ending in June, but the market has lost 1,325 homes over the same period. Inventories are down 54.5 percent.

Detroit - Likewise, inventories are down in the Motor City by 47.1 percent in the past year. However, with the loss of 1,554 homes, the market did squeeze out a price per square foot increase of 8.3 percent, from 12 to 13 bucks.

Boston - The Beantown price per square foot rose more than 19 percent from $393 to $468 over the past year as the market lost 46.7 percent of its homes. At the end of June 2013 there were 856 homes on the market, compared to 1,607 the year before.

Las Vegas - Even as inventories rose in Sin City, prices followed suit. In the past year the number of homes on the market increased by 18.2 percent, going from 3,254 in June 2012 to 3,847 in June 2013. Meanwhile the per square foot price was up more than 22 percent from $86 to $105.

"Our data indicates that it is still a seller's market, with a strong possibility that as the summer rolls on more homes will come on the market and housing prices will decrease. At that point, the market will transition to a buyer's market," the Movoto report says.

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  About the author, Broderick Perkins

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.