It’s a big week for housing data, with two reports set for release. On Wednesday, the National Association of Realtors will release data on June’s existing home sales, and on Friday, the U.S. Census Bureau will highlight new home sales data. In this article from Zillow, economic analyst Alex Hubbard provides a forecast for both reports.
Sales of existing and newly built homes are expected to move in the same direction in June, with new home sales volume rising more from May than existing home sales, according to a Zillow forecast.
Zillow expects Wednesday’s June existing home sales data from the National Association of Realtors to show a monthly increase of about 1 percent, to a seasonally adjusted annual rate of 5.40 million units, up from 5.35 million units in May. Friday’s June new home sales data from the U.S. Census Bureau is expected to show a monthly increase of about 2.5%, to a seasonally adjusted annual rate of 560,000 units, up from 546,000 units in May. The combined increase would bring total new and existing home sales to their highest level since November 2009, when federal homebuyer tax credits helped boost home sales.
Zillow expects the median price of a new home to rise to $282,800 in June, up 1% from May, and the median existing home price to rise to $223,400, up 1.3% from May.
Both new and existing home sales made positive strides through the first five months of 2015, and Zillow expects they will end the second quarter on a high note. Sales of newly constructed homes have increased in four of the past five months, accumulating 232,000 sales, a 22.8% spike from the same period last year. But unlike existing homes, the price of a typical new home has been declining as builders construct less expensive homes aimed at a more modest segment of the market. The median price of a typical new home is currently $280,400, down about 1% from $283,000 a year ago.
Housing demand should pick up through the summer home shopping season, given recent improvements in the job market and rapidly improving income growth. After six long years of persistently high unemployment, the unemployment rate has finally reached (and is actually slightly below) the estimated natural rate of unemployment. Monthly personal income grew by 3.7% year-over-year during the first half of 2014, on average. That growth has accelerated in 2015, growing 4.4% year-over-year, on average. Accelerating income growth has been accompanied by persistently low mortgage rates, making a mortgage itself more affordable relative to historic norms.
