Housing demand is now back at the healthy 2006 levels but increased resale supply is negatively affecting the new low-rise market and the outlook for house prices, according to Will Dunning:

"The volume of listings has increased sharply this year (currently about 15% above year ago levels), signaling a probable shift to an end-of-cycle psychology. In addition to reducing price pressure, increased resale supply is negatively affecting the new homes market."

In the latest edition of his Housing Market Digest, Dunning reports that resale market activity has rebounded from the slump this winter. While sales are below the 2007 record, recent activity is comparable to figures seen during 2004 to 2006. In June this year, 8,600 actual sales equated to 83,800 seasonally adjusted, slightly below May’s 86,900, his report says.

New home sales slightly improved in June. The 3,544 sales equate to 39,000 after seasonal adjustment. They are up from 32,400 in May but still below the total 2007 sales of about 45,000 units.

There were 1,452 low-rise sales in June, these equate to 17,800 seasonally-adjusted. "While increasing government-driven costs and limited land supply are factors in the evolving low-rise slump, increased competition from resales is also a significant factor," the Dunning report says. Click the below graph to enlarge it.

In high rises, the total of 2,092 actual sales equate to 21,300 seasonally adjusted. The year-to-date sales rate remains high at 17,200. While lower than last year’s record, sales are similar to the very high figures seen during 2005/2006.

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