Since 1979, RealTrends has been collecting data on housing. Households, new and old home sales, prices, mortgage rates, annual changes in Gross Domestic Product, and other data related to housing sales are all included in RealTrends.
We are still fascinated by the number of households that buy a home each year as a piece of data. This data point includes the 42-year average, which stands at 4.80%, and the median over that time period, which is 4.67%.
These two measurements are so close together, it makes sense that they can be used as a barometer for the housing market.
This rate was 7.3% in 2005, at the height of the previous housing boom. Evidently, there was something wrong. We discovered this when the rate dropped to 3.84% in 2010.
Many people don’t recall that the housing market plummeted well past the general economic recovery, which was evident in 2009 with the growth in the GDP.
From 2012 (rate of 4.17%), to 2021 (rate at 5.30%), the recovery in housing sales occurred. This is a 27% increase over 10 years, slow but steady.
The rate for 2022 was 4.32%, which is a decline of 18.5%.
Forecasting the purchase of a home by 2023 households
There are many forecasts for 2023 that range from 5.1 to 5.4 million homes sold. If we reach the middle of these, 5.25million total sales, then it would be at a rate of 3.9%-4.0% of all households buying a home this year.
We have room for growth to return to the median, or the average, of the past 42 years. Moving back to the median would result in 625,000 additional home sales. This would bring us back to 6 million units, which is still below the 6.8 million to 6.9million industry achieved in 2021.
There is still a lot of demand
Most estimates suggest that between 2010 and 2021, the U.S. saw a rise in the number of households. It exceeded the 4 million to 4.5 million single-family and multi-family housing units. The homebuilding industry faces a challenge to make up the difference.
It seems that, with a homeownership rate of 65.9%, these factors indicate that housing turnover velocity has slowed significantly. Simply put, more families are staying put. This is also evident in the low number of houses for sale.
Do not bet on a quick recovery. It will take a slow climb to the median. Any brokerage firm that bets otherwise risks financial ruin.
Steve Murray is a Senior Advisor for RealTrends, and a Partner with RTC Consulting.
This column does not necessarily reflect RealTrends editorial department or its owners.
To contact the author of this story:Steve Murray at smurray@realtrends.com
To reach Tracey Velt, the editor for this story, email tracey@hwmedia.com