Housing's underperformance gap closes

Release of pent-up supply primary reason
  • Underperformance gap narrowing indicates more buyers with equity in their homes are opting to sell.
  • Despite the gap narrowing, significant fluctuations in month-to-month home sales activity is not expected.
  • Millennials and boomerang buyers will play a large part in the performance of the housing market moving forward.

Dramatic improvement in the existing-home sales market this summer narrowed the gap between market capacity and actual sales. According to First American, the current underperformance gap is an estimated 307,000 home sales at a seasonally adjusted annualized rate (SAAR). This is significantly less than the sales capacity gap of 1.7 million existing-home sales in February 2014.