US Housing Market Stabilizes in 2014: A Return to Sustainable Growth

The US housing market is transitioning to a more stable and sustainable phase in the second half of 2014, following a volatile post-recession period. Key indicators, including sales figures, buyer foot traffic, price appreciation, and inventory levels, all point toward a balanced market recovery. This shift represents a significant move away from the abnormal, investor-driven frenzy of 2013 toward a healthier environment for buyers and sellers.

What Were the Key Housing Market Trends in Mid-2014?

By June 2014, the market showed clear signs of steadying. Home sales for the month reached 114,240, a decrease of only 2.5% compared to the exceptionally strong June 2013. Significantly, sales increased on a year-over-year basis in eight major metropolitan areas, including Atlanta (+8.2%) and Charlotte (+8.3%). This data suggests the market was catching up to the previous year's highs rather than experiencing a decline. The median sales price, which is the midpoint price where half of all homes sold for more and half for less, grew at a more moderate rate of 6.4%, a two-year low. This slower appreciation is a hallmark of a sustainable market, unlike the double-digit increases seen in 2013.

Is Buyer Demand Increasing?

A leading indicator of buyer demand, foot traffic, showed a notable increase. Data from real estate agencies indicated that the number of customers touring homes with agents in June 2014 was up 27.1% from the same period a year prior. This growth was unusual as it extended beyond the typical spring peak, signaling strengthening demand heading into the latter half of the year. The key factor moving forward was whether mortgage lending would be available to support this growing pool of interested buyers.

How is the Housing Inventory Situation Changing?

After a dramatic 44% plunge between 2009 and 2012, housing inventory began a slow recovery. For the second consecutive month in June 2014, the number of homes for sale nationally exceeded 500,000, an 8% increase from the previous year. Housing inventory refers to the total number of active property listings available for sale at a given time. Twenty-two out of thirty major markets reported more homes for sale than the year before, with the most significant increases in markets like Riverside-San Bernardino, California (+28.1%). This growth in supply helps to moderate price growth and provides buyers with more options.

What Does Sustainable Price Growth Look Like?

The shift from 14% average price growth in 2013 to 6.4% in mid-2014 is a positive development for long-term market health. Rapid, double-digit appreciation can create an unstable environment, pricing out many buyers and leading to potential bubbles. The more moderate rate observed aligns with historical norms and indicates a market that is edging back to normal, benefiting from pent-up demand accumulated during years of low inventory.

Conclusion: A More Balanced Market Outlook

Based on the assessment of mid-2014 data, the housing market was positioned for a stronger finish to the year. While long-term economic challenges remained, the core trends pointed to a positive shift. For participants in the market, this meant:

• Buyers could expect more choice due to rising inventory and less competition from all-cash investors.
• Sellers could anticipate continued demand but needed to price homes competitively as price growth moderated.
• The overall market's move toward balance suggested a more predictable and sustainable environment for all parties involved.