The US housing market is seeing bottom.
Home-vacancy rates in the US fell to 3.4 percent as of mid-July from 3.6 percent a year earlier, as the total number of homes receiving mail increased by 970,000, according to Trulia Inc. The additional households include about 760,000 new homes and 210,000 formerly vacant homes.
In a sign that the housing market is recovering, the home-vacancy rate is falling in US cities such as Las Vegas and Phoenix that were hit hardest by the housing crisis. The Census Bureau reported last week that the US home-vacancy rate fell to the lowest level since 2006 in the second quarter, while new households formed at an annualized rate of about 800,000.
Household formation fell to a 100,000 pace in the fourth quarter of 2008, following the US financial crisis triggered by the bankruptcy of Lehman Brothers Holdings Inc. A normal rate is 1.2 million new households a year, which would spur demand for 1.6 million new residences, says Stephen East, a homebuilding analyst with International Strategy & Investment Group LLC.
The shrinking vacancy rate indicates that the so-called shadow inventory, which includes homes facing foreclosure or repossessed by banks that are not listed for sale, is smaller than the biggest estimates and less of a threat to a real estate recovery, Trulia Chief Economist Jed Kolko said.
The shadow inventory was 5.95 million homes last month, down from a high of 8.79 million in early 2010, Morgan Stanley said in a July 26 report.
“Inventories are actually dropping partly because homes are filling up –- not just because people or banks are unable or unwilling to put homes on the market,” Kolko said. “In fact, vacancies are better than inventories as a measure of whether there’s a housing shortage or housing glut.”
The vacancy rate fell to 1 percent in the San Jose area, which includes Silicon Valley, where technology companies have been hiring and homebuilders face limited land supply and regulatory challenges that slow development, Kolko said. Job growth also helped reduce vacancies in Denver; Seattle; Raleigh, North Carolina; and Nashville, Tennessee, he said.
In fact, last week, the upward revision to the demand for new US homes last May was the highest level in two years, in a sign that the housing market is recovering. Though home purchases increased to a lackluster 350,000 annual rate last June, the upwardly revised 382,000 figure for May was the most since April 2010.
Written for AlgosysFx