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Are We Really Recovering? Another View on Housing

by Peter Thomas Ricci

There had been rumblings early on that there was more to the housing recovery than met the eye, and new data from NAR confirms those suspicions.

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Throughout 2013, there have been many positive developments in the housing market, and many analysts and publications (ours included), have rightfully labeled 2013 as the beginning of a slow, steady housing recovery.

However, new data from the National Association of Realtors (NAR) is casting a more nuanced light on the housing recovery, and questioning not so much the existence of a housing recovery, but rather, some of its fundamentals.

A Study in Proportions

The data, which NAR published on its Economists’ Outlook blog, broke down the association’s recent existing-home sales findings into more particular brackets, specifically: the proportion of the housing market that certain price brackets comprised; and how well home sales fared for those price brackets.

NAR’s findings further underscored a point that many had suspected, which is that the housing recovery has been more potent and immediate among higher-income consumers, resulting in a disproportionate share of higher-priced homes to circulate through the housing market.

Higher Up the Economic Ladder

And that fact certainly explains many of the housing market’s more peculiar developments in 2013, from the remarkable, double-digit price increases (median existing-home sale price was up 11.7 percent in September, the 10th straight month of double-digit increases), to the spectacular rise in the size of new homes, which set a new record in 2013’s second quarter with an average size of 2,642 square feet.

How disproportionate is the share of higher-income homes? See our infographic below to find out:

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