The U.S. housing market remains difficult for many Americans to enter, despite economic gains made in 2017, speaking to a larger issue of housing unaffordability for thousands of U.S. families.
Sales of existing or previously owned homes rose by 0.7% in September, the first time that the metric rose in three months and bringing up the annual rate to 5.39 million. The number of homes available for sale also climbed by 1.9% last month, but total housing inventory fell short of last year by 6.4%, compared to a year ago at 1.9 million.
As for affordability, housing prices continue to climb at a rate that outpaces wage growth and inflation. The median price of a home jumped 4.2% to $245,100.
Housing sales were expected to take a hit due to the hurricanes Irma and Harvey, but that was offset by growth in other parts of the country. In the South, closings fell by 0.9%.
But the overall trend in the U.S. housing market is one of low supply and high prices, keeping many first-time would-be homeowners priced out of the market.
Sales rose just 3.3% in the West and by 1.6% in the Midwest, while they remained flat in the Northeast. These numbers are all low compared to growth seen in other parts of the economy.
The U.S. housing market should be doing much better than it is. The economy is in its ninth year of expansion and unemployment is at a 17-year low, although the quality of those jobs and stagnating wages curbs the gains made by high employment.
As demand for housing continues to climb, supply is falling behind. New and existing home sales simply haven’t met the numbers they’ve needed to in order to provide suitable housing options for many Americans. With mortgage rates on the rise, many prospective homeowners haven’t managed to gain a foothold in the market.
Across the country, a similar story is playing out in many localized U.S. housing markets. Wages have stagnated across the board, but especially for the middle class, while housing demand has skyrocketed in recent years, most notably in urban hubs. With most jobs being created in those very same cities, the idea of living out the American dream and owning a home is buffeted by the stark reality of a tough housing market for average U.S. citizens.
“Low supply, high prices still keeping a lid on sales of existing U.S. homes,” MarketWatch, October 20, 2017.