In November’s REAL Trends Housing Market Report, home sales in 2014 jumped 9.3 percent, compared to the same time in 2013. As of October, the annual rate for both existing and new home sales hit 6.184 million units, up from the same quarter in 2013 of 5.659 units.
Housing prices on the rise
In a report prepared by Harvard University, while the mid-single to low-digit growth rate over the last five months has settled somewhat, housing prices are on the rise, climbing an average of 2.4 percent when compared to the same time in October 2013. The best performing region was the South, with sales in October increasing 13.8 percent. Also experiencing a growth in sales numbers were the Northeast at 9.6 percent, the Midwest at 6.6 percent, and the West, with a 4.5 percent jump.
The country’s best results for the average price of homes sold in October was for the Midwest, with a 4.9 percent bump. This region also experienced an increase in average prices by 4.4 percent. In the meantime, the South had an increase of 2 percent for average prices, and so did the Northeast with a 1 percent jump.
Homebuyers catching up to the market
Since the first quarter of this year, home price increases have leveled out dramatically. As a result, quiet mortgage rates and household incomes had the opportunity to improve, so homebuyers had a chance to catch up with the market. As reported, strength in the market is now being seen month-to-month, which was unexpected.
Experts agree that if job growth and mortgage interest rates stay positive, there will be a slow, but steady improvement, in home sales. Although existing home sales are growing, analysts expect they will be higher in 2015, which will benefit buyers and sellers alike.
Existing home sales started slow this year, but with more inventory, greater demand, and slower price gains, they have continually shown stronger growth. As one can imagine, a more secure job market is boosting consumer confidence, while the home price rebound is allowing current homeowners to sell sooner, rather than later.
2016 home sales forecast
The forecast for existing home sales is expected to increase to 5.3 million and 5.4 million for 2016. For both 2015 and 2016, the national median price for existing homes is anticipated to climb 4 percent.
Even with a forecast of higher sales over the next two years, challenges could prevent the housing market from reaching its highest potential. Overall, real estate agents are highly optimistic, but things like shortages in inventory coupled with tight lending credit have impacted consumer confidence to some degree.
Effect on multifamily
Due to the fact that the recent downturn primarily affected strong demand for renting, multifamily housing should begin to rebound. However, with smaller builders struggling to secure construction loans, single-family homes are still lagging.
As far as renter households, since 2010, there has been a 4 million increase. Also, during the same period, homeowner households have declined roughly 1 million. By 2014, housing supply should reach 1.3 million, still falling below the demand at around 1.5 million. However, as more credit is being opened up by lenders for builders, this should begin to normalize.