The chart above likely means two completely different things if you’re a homeowner in the West compared to a prospective buyer.
It was reported in yesterday’s release of March Pending Home Sales that last month’s increase signaled a solid beginning to the spring buying season. The continued strength in the labor market and surprisingly low mortgage rates are encouraging more prospective buyers to enter the market this spring. However, the gains are not consistent in all regions.
According to Lawrence Yun, NAR chief economist, existing-home prices in the West have jumped an astonishing 38 percent in the past three years. While this boost in home values is a boon to current homeowners, it’s creating a large affordability crunch for many households looking to buy.
The result? Overall demand is starting to weaken in quite a few markets out West. Contract activity in the region has now declined in four of the last five months and is lower than one year ago for the third month in a row. Furthermore, closed sales in the region in March were also below last year’s pace.
It’s becoming more apparent than ever that there’s a massive need for more new single-family homes in many of the top job producing markets. The prospective buyers are there. Where’s the supply to expand buyers’ options and help improve affordability?