It’s early days, but there are a number of signs that the national housing market is moving in the right direction.
Lawrence Yun, chief economist for the National Association of Realtors (NAR), ties increasing sales of existing homes to an overall improvement in the market. For example, this May, housing sales increased by 4.9 percent, the biggest gain since August, 2011. At the same time, inventory is expanding and prices are leveling off as more properties become available. At May’s end, 2.28 million units were for sale, up 6 percent over the previous 12 months.
As Bloomberg News notes in a recent article, a more balanced market, lower interest rates, and more choice of properties will attract more buyers into the market. Employment prospects are looking up, and this also may swell the ranks of buyers.
Other good news: While mortgage rates increased mid-summer based on the brighter employment picture, loans remain affordable, and the index of mortgage applications for home purchases, released by the Mortgage Bankers Association in early July, was on the rise. Sales of new homes also are increasing. In May, for example, new construction sales came out ahead of the 500,000 (annualized) mark for the first time since 2008.
NAR expects growth in 2015. Says Yan: “Existing home sales, due to a sluggish first quarter, will fall a bit short in annual tally this year, but will show growth in 2015. Home prices will rise, though at a manageable, single-digit rate of appreciation over the next two years.”