If no more homes were placed on the market in Kentucky, it would take 3.1 months to sell everything in inventory at present. That figure is at the lowest point since it began being tracked by Kentucky REALTORS® in 2013. Economists say that a healthy housing market has about a 6-month inventory level. In the Commonwealth, supply just can’t keep up with the increasing demand. The unfortunate side-effect of this is rising prices.
President Trump signed an executive order this week establishing a White House Council on Eliminating Barriers to Affordable Housing Development. The council will consist of members from across 8 Federal agencies and will be chaired by Secretary of Housing and Urban Development (HUD) Ben Carson. It is reported that this new council will engage with State, local, and tribal leaders to identify and remove obstacles that impede the development of new affordable housing. It will also look at the effect Federal, State, and local regulations are having on the costs of developing affordable housing and the economy.
The National Association of Realtors (NAR) welcomed the news of the announcement and applauded the actions of the Administration. In a release from NAR, 2019 President John Smaby said, “Today, despite historic economic growth and recovery, misguided regulations and gaps in new home constructions have stopped far too many Americans from purchasing a home. The National Association of Realtors® thanks President Trump for taking much-needed steps to address housing affordability in this country, and we look forward to continuing to work closely with the White House to ensure the American Dream remains attainable for all those who seek to become homeowners.”
In Kentucky, May closings surged 5.6% to 5,346 homes, up from 5,064 in 2018, marking the second-highest May on record. Year-to-date closings are also just off the pace of the 2017 record high year. So far in 2019, 20,295 homes have sold, up from 20,046 at this time last year.
Lawrence Yun, NAR chief economist, said lower-than-usual mortgage rates have led to a nationwide increase in pending home sales for May. “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.” Yun said consumer confidence about home buying has risen, and he expects even more activity in the coming months. “The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”
May’s days-on-market figure rose ten percent to 110 days, up from 100 days in May of last year. The year-to-date number is slightly higher at 113 days, which is a three percent drop over this time last year.
Rip Phillips, 2019 President of Kentucky REALTORS®, says that the rising demand is actually having an effect on the real estate industry. “Increasing numbers of individuals are seeking to get licensed in Kentucky”, he said. “Economists look at job creation as the mark of a strong economy. Conversely, when the economy strengthens the housing market, it leads to job creation in those related positions. That’s good news for the industry responsible for 15% of Kentucky’s gross state product.”
The ever-increasing demand for homes is still driving prices upward. The median home price rose almost five percent to $140,813, up from $133,923 in May of 2018. This is second only to June of last year when the median closing price reached $144,581).