Don’t be impressed by the headlines reporting year-over-year housing numbers over the next few months (data for March, April, May and June). The data will most likely show striking one-year increases.
While the annual jumps are sure to hit, consumers need to take these numbers with salt, as the situation highlights a short-term whim in the reporting of these data. Basically the increases will reflect a combination of two things: sharply lower housing prices over the past year of viral market collapse and the subsequent strong rebound. This will result in what will appear to be incredible growth.
Let’s use single family home sales as example:As the chart reveals, last spring’s buy market was anything but typical. Instead of sales rising, they fell sharply as a result of domestic orders, which nearly shut down real estate.
This spring’s real estate market will rebound with more normal seasonal sales increases. The percentage increase in sales will be astronomical – not because sales have exploded, but instead because they will be compared to last year’s low numbers.
There will probably be some sensational headlines about real estate over the coming months. However, don’t be fooled. The factual history is that the real estate market is finally normal.
Content previously posted on Preserving Current Affairs