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Southeast Housing Update: Home Sales Growth, Prices Remain Positive; Inventory Shortages Persist
The Atlanta Fed’s monthly poll of regional brokers again indicates that home sales in June remained ahead of the year earlier level. Half of brokers reported that recent sales were in line with their expectations (see the chart).
Samplings of available Southeast Realtor group reports are not quite as positive as our contacts’ reports indicate (see the table); however, both sources confirm positive year-over-year growth.
A couple of brokers made an interesting observation: homes qualifying for 100 percent financing under programs such as the U.S. Department of Agriculture and the Veterans Administration were selling quicker than most in their area, leading these brokers to infer that many potential buyers lacked available savings to invest in a home purchase requiring a sizable down payment.
Reports from southeastern builders also continued to indicate sales gains on a year-over-year basis in June (see the chart). Nearly two-thirds of builders indicated that activity was in line with their plan for the period. Similarly, builders indicated that new home construction activity was slightly ahead of the year-earlier level in June. Builders continued to note growing pressure on margins from rising labor and material costs. There were more reports from builders on labor shortages and the challenge to find qualified workers. Most indicated that labor costs were up between 1 percent and 5 percent on a year-over-year basis.
Inventories remain low
Low home inventories continued to be reported across the Southeast and were considered by many contacts to be restraining home sales. Most builders and brokers reported that home inventories in June were below the year-earlier level. Data from the National Association of Realtors on home inventories confirms falling inventories on a year-over-year basis throughout much of the Southeast (see the table).
Contacts continued to indicate that shortages of available homes for sale were a major factor in the continued rise in home prices. There were several reports from across the region of multiple offers on homes with some selling above list price. Most contacts reported that new and existing home prices were up slightly from a year earlier (see the chart).
The outlook among housing contacts remained mostly upbeat, although some noted concern over rising mortgage rates and the scarcity of new home lots. However, the outlook for sales over the next several months is a bit more positive compared with contacts’ year-earlier expectations (see the charts).
Note: June poll results are based on responses from 44 residential brokers and 25 homebuilders and were collected July 8–17, 2013. The housing poll's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity while negative values indicate decreased activity.
If you are a real estate broker or homebuilder and would like to participate in this poll, please send a note to RealEstateCenter@atl.frb.org.
By Whitney Mancuso, a senior economic analyst in the Atlanta Fed's research department
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