Signs of recovery continue in the housing market, demonstrated by improvements in the number of homes sold and national home prices. For the first time since June 2011, the median home price has exceeded $175,000. Continued strength in economic indicators, employment, and consumer confidence could help to bring full recovery to the housing market. Relaxation in financial institution’s tight lending standards will also significantly help the recovery.
“With the tight lending environment it’s a good idea to consult with a Realtor about mortgages and program options in the area, and tips for boosting credit scores well in advance of making an offer on a home,” National Association of Realtors President Moe Veissi advises. “It helps to go into the process knowing what it takes to succeed.”
With rents on the rise, buying has become an increasingly attractive option due to home affordability, or the percentage income it takes to pay the mortgage, is the most favorable in market history. Current record interest rates, which factor into affordability, will not last forever, so buyers wanting to take advantage of this unique time in history will want to act before rates rise.
Home sales increased 10% from a year ago to 4.62 million units, which is also up 3.4% from the previous month. A strengthening economy is improving consumer confidence and drawing an increasing number of people into the market. Some local markets are experiencing a shift back into a seller’s market, leading to a shortage of homes available for sale, multiple offers, and higher prices. As more markets follow suit, national home sales could continue to increase.
Thanks to a decline in distressed properties (which includes short sales and foreclosures that traditionally sell for 15%–20% less on average compared to non-distressed homes), the median home price rose 10% year-over-year to $177,400. This is the first consecutive month-to-month increase in home prices since June and July of 2010. NAR Chief Economist Lawrence Yun said “For the year, we’re looking at a modest overall price gain of 1%–2%, with stronger improvements in 2013.”
Inventory- Month's Supply
Housing inventory increased to 6.6 months supply, which is 28% below year-ago levels. This marks the fifth consecutive month of inventory near a six-month supply, which is the threshold of a balanced market. It is also significantly below the previous three years, in which year-end month’s supply ranged from 8.2–9.5. This indicates movement out of this deeply entrenched buyer’s market and is an important step toward a full-scale housing market recovery.
Source: National Association of Realtors
Mortgage rates continue to boost home affordability by remaining below 4%—some of the lowest rates on record since 1971. These rates may come as close to bottom as they can get, adding to the urgency to buy a home now while these record lows hold.
Thinking about buying? Wondering what pushes others to jump off the fence and buy now? Here is some insight into the top 3 reasons that impact a buyer’s sense of urgency:
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