Asset Bubble Update - Residential Real Estate
Bloomberg reports politely on the latest manifestations of the residential real estate frenzy. At least I wasn't the only one who was surprised.
Sept. 26 (Bloomberg) -- U.S. sales of previously owned homes unexpectedly surged to the second-highest level on record and prices reached an all-time high in August, spurred by job growth and interest rates within a percentage point of historic lows.
Existing home sales rose 2.0 percent to a 7.29 million annual pace last month from a revised 7.15 million rate in July, the National Association of Realtors said today in Washington. The median price rose 15.8 percent to a record $220,000 and the supply of homes for sale rose from the previous month.
. . .
The increase in median home prices in August was the strongest rate of appreciation since July 1979. Economists surveyed by Bloomberg News expected home resales would fall 0.6 percent to 7.12 million from July's previously reported 7.16 million pace. Estimates ranged from 7 million to a high of 7.4 million.
Two slightly different ways of expressing what's going on here:
``We have some way to go before we get into a range of balance between home buyers and sellers,'' said David Lereah, chief economist for the Realtors' group. ``As a result, we will continue to see above-normal home-price appreciation for the foreseeable future.''
Contrast:
``Home resales are surprisingly resilient in the face of rising energy costs,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. ``The froth in the existing home sales market continues, and buyers are trading homes like they once did internet stocks.''