US surge in unsold homes may herald cooling market
US surge in unsold homes may herald cooling market
By Christopher Swann in Washington
Published: June 7 2006 17:33 | Last updated: June 7 2006 17:33. Copyright by The Financial Times
The number of unsold homes on the American market has risen by more than 1m over the past year, a gain of a third, increasing the prospect of a rapid cooling of the US property market.
The inventory of new and existing homes waiting for buyers is now approaching 4m.
The surge in unsold homes has been largely due to a release of new properties on the market rather than a sharp slowdown in sales. This suggests that many sellers are eager for one last payout before the halcyon days of the market draw to a close. Speculative buyers may also be trying to exit the market before conditions deteriorate.
“We should start to see a stand-off as buyers offer lower prices and homeowners refuse,” said Paul Ashworth, US analyst at consultants Capital Economics.“After a period of frustration, sellers should become more realistic about what their homes are worth.”
The pace of home sales has slowed over the past year, but not dramatically. Existing home sales have fallen by just under 6 per cent over the past year to an annualised 6.75m units in April. New home sales are down from an annualised 1.27m last April to 1.198m units this year.
Despite continued robust sales, the inventory of unsold homes has continued to rise. With sales at their current pace, it would now take six months to sell the existing homes on the market – the largest oversupply since the National Association of Realtors started collecting figures in 1999.
So far evidence of a slowdown in the housing market has remained tentative. Prices continued to rise at an impressive 12.5 per cent in the first three months of the year, according to comprehensive figures produced by the Office of Federal Housing Enterprise and Oversight. Overall US house prices have climbed by almost 60 per cent over the past five years, with prices more than doubling in a host of property hot-spots such as Washington DC, California, Nevada and Florida.
The total value of US residential property is now around $19,000bn (€15,000bn, $10,000bn), according to the Joint Center for Housing Studies at Harvard University. The US Census Bureau calculates that there are around 123.9m housing units in the US.
“We are at a turning point in the housing market,” said Nicolas Retsinas, director of the JCHS at Harvard. “But this does not mean that we are going to take a nose dive, except in selected areas of overbuilding and highly inflated valuations.”
By Christopher Swann in Washington
Published: June 7 2006 17:33 | Last updated: June 7 2006 17:33. Copyright by The Financial Times
The number of unsold homes on the American market has risen by more than 1m over the past year, a gain of a third, increasing the prospect of a rapid cooling of the US property market.
The inventory of new and existing homes waiting for buyers is now approaching 4m.
The surge in unsold homes has been largely due to a release of new properties on the market rather than a sharp slowdown in sales. This suggests that many sellers are eager for one last payout before the halcyon days of the market draw to a close. Speculative buyers may also be trying to exit the market before conditions deteriorate.
“We should start to see a stand-off as buyers offer lower prices and homeowners refuse,” said Paul Ashworth, US analyst at consultants Capital Economics.“After a period of frustration, sellers should become more realistic about what their homes are worth.”
The pace of home sales has slowed over the past year, but not dramatically. Existing home sales have fallen by just under 6 per cent over the past year to an annualised 6.75m units in April. New home sales are down from an annualised 1.27m last April to 1.198m units this year.
Despite continued robust sales, the inventory of unsold homes has continued to rise. With sales at their current pace, it would now take six months to sell the existing homes on the market – the largest oversupply since the National Association of Realtors started collecting figures in 1999.
So far evidence of a slowdown in the housing market has remained tentative. Prices continued to rise at an impressive 12.5 per cent in the first three months of the year, according to comprehensive figures produced by the Office of Federal Housing Enterprise and Oversight. Overall US house prices have climbed by almost 60 per cent over the past five years, with prices more than doubling in a host of property hot-spots such as Washington DC, California, Nevada and Florida.
The total value of US residential property is now around $19,000bn (€15,000bn, $10,000bn), according to the Joint Center for Housing Studies at Harvard University. The US Census Bureau calculates that there are around 123.9m housing units in the US.
“We are at a turning point in the housing market,” said Nicolas Retsinas, director of the JCHS at Harvard. “But this does not mean that we are going to take a nose dive, except in selected areas of overbuilding and highly inflated valuations.”
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