The market potential for existing-home sales has risen 30% from this time last year.

First American released its proprietary Potential Home Sales Model covering April, which showed potential existing-home sales increased to a 6.31 million seasonally adjusted annualized rate (SAAR), a 1.3% increase for the month. It represents an 81% increase from the market potential low point reached in February 1993. Compared with one year ago, the market potential for existing-home sales increased 30%, a gain of 1,450,345 (SAAR) sales. The year-over-year comparison is very large this month as the housing market came to a halt last year at this time when the pandemic shut down the economy. Housing rebounded sharply in the summer. Today's potential existing-home sales is 481,854 (SAAR), or 7.1% below the pre-recession peak of market potential, which occurred in April 2006, the analysts said. First American's Chief Economist Mark Fleming added that "relative to two years ago, housing market potential is 16.7% higher and will likely remain elevated as rates continue to hover near historic lows, the economy improves and puts upward pressure on wages, and millennials continue to choose homeownership over renting."  He continues, "One of the primary drivers of housing market potential in April was the rise in house-buying power, which increased by $6,900 compared with the previous month, contributing to a gain of nearly 49,000 potential home sales."  However, the market continues to grapple with the conundrum that is the supply shortage. "You can't sell what is not for sale," Fleming said. And although the sellers' market is robust, many hesitate to sell due to the difficulty of finding a new home in this market. "If sellers all chose to sell, they would benefit as buyers because the inventory of homes for sale would increase and alleviate the supply shortage."

Source: DS News