Throughout the country people are finally sighing relief as the economy continues to strengthen. Based on a recovering economy, many cities experienced a much-improved housing market last year but even so, in December there was a cooling in the number of homes sold.
In a monthly index designed to measure the number of signed contracts for purchasing existing homes, there was a decline of 3.7 percent. However, the index, which is generated by the National Association of Realtors, also showed that compared to the same time in 2013, numbers were up 6.1 percent. Then in looking at the number of closed sales from two months prior, there was a 2.4 percent increase from November to December.
Professionals Weigh In
As stated by Lawrence Yun, chief economist for the National Association of Realtors, it was the first time in 16 months that total inventory of houses dropped. With this, homebuyers were left with fewer choices. In addition, December brought a slight price growth for housing markets all over the United States.
Yun added that strength in existing home sales for the first quarter 2015 will depend primarily on how willing current homeowners are to realize gains in equity from the past several years, prompting them to move to larger and/or nicer homes. With interest rates now at the lowest level since 2013, it will be interesting to see what people ultimately decided to do.
Also in December, the number of signed contracts specific to purchasing newly constructed homes increased 11 percent. Home developers, as well as real estate professionals agree that over the past several months, there has been a definite increase of buyer traffic. In fact, for fourth quarter 2014, one of the largest builders in the US, PulteGroup, reported that earnings were better-than-expected.
Richard J. Dugas, Jr., President and CEO of PulteGroup states that going into 2015, his organization is extremely optimistic since there has been a distinct improvement in buyer interest during the latter part of November. Based on this, more buyers and higher levels of signup are anticipated well into 2016. He stressed that a recovering and strengthening economy is the reason, coupled with low mortgage rates, increasing employment, and reduced costs for energy.
- For a large portion of the Northeast, the index dropped, falling 7.5 percent on a month-to-month basis
- In the South, the index was down 2.6 percent
- In the Midwest, pending home sales were down 2.8 percent
- For the West, a part of the country that has been experiencing incredibly strong sales over the past few months, the index decreased 4.6 percent
As far as overall 2015 projections for total sales, professionals believe there will be an increase of 6.6 percent to 5.26 million. Although home sales declined in December, experts in real estate, lending, and home building all agree that 2016 is going to be a great year for the housing market. In fact, there are some cities like Denver Colorado where the bigger problem is too few homes to meet growing demand.