Is the housing market crashing? (Again?). In recent months there's been considerable and growing concern about whether weak year-over-year home sales in the Twin Cities and beyond portends an end to the housing recovery.
This week, in the latest weekly home sales summary from the Minneapolis Area Association of Realtors (MAAR), I spotted a bit of data that suggests otherwise: After six months of monthly, year-over-year declines in closings, there was a 0.1-percent increase in pendings for the week ending 5/10/14. That followed a a 0.7-percent gain for the week ending 4/12/14. Though not every inked deal makes it to the closing table, pending sales are an important indicator of future closings.
MAAR's data contains other clues that market fundamentals are improving in a quiet, but meaningful way. Specifically, the decline in closings is the result of dramatic weakness in foreclosures and short sales at a time when traditional buyers are stepping into the market at increasingly brisk pace. MAAR's data guru, David Arbit, said that during May, for example, traditional pending sales have been 21 percent higher over the past 12 months, while there has been 32 percent fewer foreclosure sales and 44 percent fewer short sales. The same thing happened during April.
The decline in foreclosure sales has triggered another interesting trend: There's been a dramatic decline in sales of homes priced under $150,000 and substantial increases in home sales priced above $150,000. Arbit said there were nearly 4,300 fewer pending sales priced under $120,000 during the 12-month period ending April 2014. "When you take out that many sales (many of which were distressed), the overall sales pie can shrink. But those sales represented a bitter and unwanted slice of the pie to begin with. Even so, when you get rid of that rancid slice, the overall pie does shrink but it also becomes a better, healthier pie." Anyone hungry?