“The housing market is too good,” Lawrence Yun, chief economist at the Realtors group, said at a news conference as the figures were released. “It is breaking out again. It is being accompanied by an increase in home values. We do need to see a moderation of home-price growth and that can only come from new supply.”
Housing starts need to increase to a 1.5 million annualized rate to help temper home-price gains, Yun said.
There were 2.22 million existing homes on the market in May, up from 2.15 million a month earlier, today’s figures showed. The supply fell to 5.1 months’ worth in May from 5.2 months. Listed inventory is 10.1% below a year ago.
For some builders such as Fort Worth, Texas-based D.R. Horton Inc., the lack of housing inventory has given them room to increase prices.
“For the very first time in many, many, many years, we have pricing power and a lot of that just deals with the lack of lots that are available in the marketplace for a lot of builders,” Donald J. Tomnitz, chief executive officer, said in a June 12 presentation. “The new home inventory, as you know, the number of months’ supply has decreased dramatically. And so we’re in a powerful position to continue to increase prices as we move forward.”
Sales of newly built houses picked up to a 460,000 annualized rate in May, the highest since July 2008, according to the median forecast in a Bloomberg survey of economists before a June 25 Commerce Department report. Housing starts climbed to a 914,000 pace, a Commerce Department report this week showed.
Existing-home sales are recovering after reaching a 13-year low of 4.11 million in 2008. The market peaked at a record 7.08 million in 2005.
The improvement in housing has rippled through the economy to give a boost to home-improvement product makers including Masco Corp., builders, real estate brokers and mortgage lenders.