As Home Supply Increases, Prices Should Stay Low

The Economists Didn’t See This Coming

Single family Housing Starts rose by 55,000 last month. 55,000! This suggests there’s ample housing for buyers in Des Moines.

The report is a slightly larger read than what most economists had expected.

Furthermore, for the first time since June of 2009, Housing Starts appears to have broken away from its half-million unit brick wall. 593,000 new homes were started in April.

Generally, both Wall Street and Main Street would celebrate a strong housing sector report like this, but the Department of Commerce’s press release also held two cautionary notes. Surprise!

The first point of caution is a mathematical one. Although single family starts increased by 10.2%, the survey had a Margin of Error of 10.7%. This means that Housing Starts may have fallen by 0.5% and the report is statistically worthless.

Now Just May Be the Best Time to Buy

The second point of caution is tied to Building Permit. In April, Building Permits fell by almost 11% with a tiny Margin of Error of less than 2%. This tells us that builders are pulling back — a sign of low housing market confidence

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Housing Starts, therefore, should ease though June and July.

Home prices are based on housing’s supply and demand. For the next few months, supply should increase, helping prices remain a bit beat down.

The best time to buy a home, just might be now. As the summer months come to close, we may find that buyers vastly outweigh sellers.

If you’re currently in the market and buying a home, I’d be happy to help out with your financing. I’m quick to return emails and I’m not going to lie, our rates are pretty good.