July 17, 2010
The summer slowdown usually brings a modest decline in US housing listings. So far, however, this has not been the case, pointing to possible trouble ahead.
While June listings have fallen nationally an average of 0.5% from May over the past 27 years, according to the Wall Street Journal, this year the number of homes for sale actually grew in most US cities. The inventory glut is another sign of plunging US housing demand after the expiration of the home buyer tax credit, put in place by the US government to elevate a housing market bogged down by the global financial crisis.
The supply of homes available for sale in 27 major metropolitan areas at the end of June was up 3.7% from one month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif.
The data includes all single-family homes, condominiums and townhouses listed on local multiple-listing services in markets where the firm operates.
Falling demand is not solely at fault for the rise in homes sitting haplessly on the shelf. On the supply side, inventories have been, and may continue to be, driven up as more banks take hold of homes through foreclosure.
More than seven million US households are behind on their mortgage payments or in some stage of foreclosure.
Of additional concern is that US housing inventories are rising despite mortgage rates at 60-year lows! The bargain basement mortgage rates have been driven down in part artificially by the US government’s unsustainable strategy of buying up mortgage-backed securities, effectively driving up mortgage prices, and thereby depressing rates. The cessation of this tactic, referred to as quantitative easing, may additionally weigh down on the US housing market in months to come.
Below is a list of the top ten US cities with the highest number of homes listed on multiple service listings in the metro area in June 2010:
1. Chicago – 71K homes
2. Los Angeles – 46K homes
3. Miami-Ft. Lauderdale – 45K homes
4. Dallas – 40K homes
5. Philadelphia – 38K homes
6. Boston – 38K homes
7. Washington – 36K homes
8. Houston – 35K homes
9. Seattle – 33K homes
10. Phoenix – 32K homes