Is the Current Pace of Home Sales Sustainable?

1

There are some experts questioning whether the current pace of residential home sales is sustainable. Are too many people buying homes like in 2004-2006? Are we headed for another housing crisis? Actually, if we look closely at the numbers, we can see that we are looking at a very healthy real estate market.

Why the concern?

Some are looking at the last three years of home sales and comparing them to the three years just prior to the housing bubble. Looking at the graph below, we can understand that thinking. 2 However, if we go further back in history, we can see the real picture.After taking out the “boom & bust” years, the pace of sales is growing at a quite natural pace. And new home sales are way below historic numbers.3

Trulia’s Chief Economist Ralph McLaughlin explains:

“Adjusted for population, [new home sales] are at about 63% of their fifty-year average level–way better than 2011, but nowhere near heated.”

Bottom Line

The current pace of residential home sales definitely seems sustainable.

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