Lombardi Publishing Corporation (www.LombardiPublishing.com), a 28-year-old consumer publisher that has served over one million customers in 141 countries, is responding to recent U.S. housing data and saying that despite encouraging signs, two overlooked indicators show the U.S. housing market is not as strong or resilient as first thought.
“With the major stock indices trading at record highs and second-quarter GDP bouncing back at four percent, many believe the U.S. economy has recovered. However, there are simply too many economic indicators that suggest otherwise,” says economist and lead contributor Michael Lombardi. “In particular, recent U.S. housing market data is troubling and shows that the U.S housing market is not as resilient or strong as many suggest.”
Lombardi explains that while June existing home sales climbed 2.6% month-over-month to a seasonally adjusted 4.91 million homes, the highest pace since October 2013, existing home sales are down 2.3% year-over-year. (Source: “Existing-Home Sales Up in June, Unsold Inventory Shows Continued Progress,” National Association of Realtors web site, July 22, 2014; www.realtor.org/news-releases/2014/07/existing-home-sales-up-in-june-unsold-inventory-shows-continued-progress.)
On top of that, first-time home buyers, a benchmark for economic health, accounted for just 28% of all purchases in June, says Lombardi. And the long-term annual decline is worse; in June 2013, first-time home buyers accounted for 29% of all purchases, and in June 2012, the year the U.S. housing market started to rebound, they accounted for 32% of purchases. The 30-year average, and a number that economists consider to be healthy, is 40%.
“Unfortunately, first-time home buyers continue to be squeezed out of the U.S. housing market by wealthy investors,” Lombardi adds. “All-cash sales accounted for 32% of existing home sales transactions in June; up from 31% in June 2013, and 29% in June 2012.”
The new home sales data is even more troubling. In June, new home sales plummeted eight percent month-over-month and 11% year-over-year to a seasonally adjusted rate of 406,000. Amazingly, the data come with a margin of error of plus or minus 12.3% month-over-month and 14.4% year-over-year. (Source: “New Residential Sales in June 2014,” United States Census Bureau web site, July 24, 2014; www.census.gov/construction/nrs/pdf/newressales.pdf.)
“On the plus side, new home sales have climbed 20% since the beginning of 2012. But to reach their pre-recession level, new home sales still need to climb an additional 240%,” Lombardi observes. “Who’s buying? The number of new homes sold under $150,000 and in the $150,000–$199,999 range declined 33% year-over-year, while the number of buyers in the $300,000 to $399,999 range slipped 25% year-over-year. The only price point to experience gains was the $500,000 to $749,999 category, climbing 66%; new homes listed at $750,000 and up also remain robust.”
“With high underemployment, high debt levels, stagnant wages, and rising home prices, is it any wonder new and existing home sales data is skewed the way it is? The spring thaw was supposed to usher in a big rebound in the U.S. housing market, but it didn’t,” Lombardi concludes. “The fact of the matter is, the cold weather didn’t affect wealthy home buyers or investors and the warm weather hasn’t helped first-time home buyers step onto the property ladder. That’s bad news when considering the U.S. housing market accounts for roughly 18% of the nation’s GDP growth.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.
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Name: Wendy Potter
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