October 24, 2016

Is the Current Pace of Home Sales Sustainable?

Is the Current Pace of Home Sales Sustainable?

The current pace of residential home sales is being questioned by real estate experts. Experts want to know whether the current pace can in fact sustain the housing market or whether we should be gearing for another housing crisis like we had between 2004 and 2006. However, after studying the market, there’s been a consensus that homes sales are actually quite healthy.

What causes the concern?

Many have been comparing the last three years in the market to the three years we experienced prior to the housing bubble. The graph below displays the understandable cause for concern:

Is the Current Pace of Home Sales Sustainable?

However, if we look at history without considering the housing boom and bust we experienced, home sales are actually still progressing at a natural rate.

Is the Current Pace of Home Sales Sustainable?

The current standing for home sales and new construction are way below historic numbers. As explained by Ralph McLaughlin, the Chief Economist of Trulia:

“Adjusted for population, [new home sales] are at about 63% of their fifty-year average level—way better than 2011, but nowhere near heated.”

Bottom Line

The current status of home sales isn’t a topic of worry for experts; rather, it seems we are approaching an engaging and sustainable market.

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