Increased home sales and booming prices are both great news from the housing sector, but even better news reveals the housing recovery is not only gaining speed, but it's also returning to a level of sustainable normality.
According to Capital Economics' (CE) take on the National Association of Realtors' (NAR) April report for existing home sales, the best news from the report was the drop in the share of distressed homes and more sellers coming to market.
NAR reported a 29 percent drop in the share of sales of distressed homes to just 18 percent of all sales in April, the lowest reading since 2008.
Fifteen months ago, distressed sales accounted for more than a third of all existing home sales. As distressed home sales have declined, non-distressed home sales were up 25 percent.
Also, more sellers are emerging from their underwater status and coming to market. In April, the supply of homes rose to a seasonally adjusted level not seen in six months.
Those factors add greater sustainability to the recovery.
"The market is starting to take on a semblance of normality," says CE.
While homes for sale still remain in relatively short supply, Capital Economics is optimistic the worst of the supply problem is over.
"While inventory is still very low, it's looking increasingly likely that the trough in the supply of homes for sales lies in the past," CE reported.
However, the short supply continues to boost prices.
"NAR said the median price for all homes was up by 11 percent to $192,800, for the year ending in April. That was the 14th consecutive month the national median for all housing types rose year-to-year.
The last time there were 14 consecutive months of year-over-year price increases was from April 2005 to May 2006, before the housing crash.
NAR also said the median price for existing single-family homes rose to $193,300 in April, up 11 percent from a year ago.
More affordable condo prices rose even more, by 11.3 percent to $189,500 for the year.
On the newly built homes side, sales were up 29 percent in April, nearly double the annual increase ending in October last year.
"If you discount January, today's data left sales at their highest level since early 2008," CE also reported.
The supply of new homes is also catching up, rising to an 18-month high of 156,000 new homes for sale in April. The added inventory should soon take some of the steam out of the rapid growth in home prices.
However, builders remain plagued by shortages in materials, building sites and labor, which could still restrain rapid building growth, CE reported.
"Fundamentally, there is still ample headroom for further growth even if the pace of growth may soon slow. And with tentative signs that mortgage credit conditions are thawing, new home sales should continue to post further gains for some time yet," CE reported.