Recently, the housing market has shown strong and convincing evidence of getting back on track. The most recent State of the Nation’s Housing report by the Harvard Joint Center for Housing Studies supports this. Housing was stronger in 2013, so the faltering in home construction, sales and home prices at the beginning of 2014 had raised some concerns about the fledgling housing market recovery. Despite this, undeniable progress has been made, including a sharp downturn in distressed loans like REOs and short sales.
New Home Construction Improves
New construction was below one million units for the sixth year in a row, but single family home construction leaped up by 15%. The 2013 building rebound was widespread throughout the country. While the totals are still lower than pre-2008 levels, construction for multi-family units showed solid growth for a third straight year. A full one-third of new construction was geared toward the rental market, which is extremely strong and bodes well for real estate investors looking to expand their portfolio as landlords. The National Association of Realtors reported that existing home sales increased 9.2% for 2013 with a slowing in the fourth quarter; new home sales rose 17% for 2013 according to the U.S. Census Bureau, with some cooling in early 2014. Home sales overall are still below their peak, but homes for sale are in scant supply.
Higher Demand, Fewer Distressed Loans
The National Association of Realtors reported available existing homes fell by over 200,000 units in 2013. As home sales continued to surge, the supply shrank dramatically in 2013. This trend continues as demand shows no signs of slowing in 2014. REO loans and short sales are falling as traditionally financed home sales rise. All told, these indicators taken together indicate improving market conditions.