Housing Continues the Road Called Recovery — Big Story Remains the Limited Inventory

The National Association of Realtors® release on December 2012 housing sales and related data again illuminates the path of recovery of U.S. housing markets. While many would focus on the improving home prices, the story once again is how few homes are currently available for sale. December’s 1.82 million existing home listing tally coupled with the current sales pace, yields a 4.4 month supply of homes available for sale. That is the smallest inventory seen since the 4.3 month level reported in May 2005. As shown in the graph, the trend lower goes on…..











While the number of sales faltered slightly in December 2012 when compared to November 2012 (4.94 million seasonally adjusted annualized pace versus 4.99 million the month prior), December 2012 sales were up 12.8 percent compared to December 2011. Despite the effects of limited supply available for sale, more stringent lending underwriting issues and just general variability in data from month-to-month, housing continues the healing process. Using a 12-month moving average, December 2012 sales numbers marked 18 consecutive months of increase with 2012 averaging 4.67 million sales versus 4.32 million in December 2011—a gain of 8.95 percent.











As sales (demand) continues to have positive pressure and the number of listings (supply) shrinks, prices are rising. The 12-month average of the median U.S. prices rose 6.6 percent in December 2012 compared to December 2011, increasing from $164,600 to $175,500. From the peak to trough of the housing bubble home values fell 29 percent and today are 21.8 percent less than the peak—which at that time was simply not sustainable. The interaction of supply and demand, however, portend a continuation of rising prices as 2013 progresses.











  • Distressed sales totaled 24 percent of all December 2012 closings versus 32 percent in December 2011
  • Short sales and foreclosures each made up 12 percent of the monthly sales in December 2012
  • Foreclosure sales on average sold for 17 percent less than non-distressed properties
  • Short sales sold at a 16 percent discount to arms-length transactions
  • First-time home buyers made up 30 percent of all purchases versus 31 percent a year ago
  • Buyers paying all cash acquired 29 percent of all homes in December 2012

The following two graphs illustrate why I utilize the 12-month moving average to discern trends.

On each graph, the left series are the raw monthly data while the right data series feature the 12-month moving average. Note how readily the direction of both sales and price are revealed in the moving-average data sets.





















The bottom line is that housing continues the road to recovery. In turn, so goes the housing market, so goes the economy—and the outlook for the economy gets brighter each day as housing trudges back up the mountain.

To read the entire NAR release and related statistics click here

or for the general statistics page , (NAR has a great information list on that site) click here.


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