Existing Home Sales of U.S. homes climbed to an eight-year high in June as momentum in the residential real estate market continues to accelerated at unsustainable rates with low inventory.
Closings on existing homes, which usually occur a month or two after a contract is signed, climbed 3.2 percent to a 5.49 million annualized rate, That’s the most since February 2007, as reported by the National Association of Realtors on Wednesday and while prices rose to a record levels amid tight supply.
The housing market has picked up in recent months as the economy improves and would be home buyers are beginning to feel more secure about their employment prospects. Much of the increase can likely be contributed to the recent increase in mortgage rates and those on the fence realizing now is the time to lock in historically low mortgage rates before September’s possible rate hike by the Federal Reserve Bank.
The wild card in the report is the need for faster wage growth which is sorely needed to help housing continue its recovery and become a bigger contributor to growth can be expected to continue.
In short, the housing market is on fire right now and demand is projected to be sustained rate of 5.48 million units.
The median forecast for the pace of existing-home sales surveyed by 76 leading housing economists projected a gain to a 5.4 million pace in June. Estimates ranged from 5.20 million to 5.52 million. The National Association of Realtors also revised May’s rate to 5.32 million from a previously reported 5.35 million.
Compared with a year earlier, purchases increased whopping 9.6 percent in June on an adjusted basis. The median price of an existing home rose 6.5 percent from June 2014 to $236,400, the highest on record before adjusting for inflation!
Median Price of Existing Home Sales
The number of existing properties on the market rose to 2.3 million in June compared with 2.28 million at the end of May. At the current pace, it would take 5 months to sell those houses compared with 5.1 months at the end of May.
The median time a home was on the market is only 34 days, the fewest in records going back four years.
The market is tighter compared to last year. “Home values are rising too fast and we need more supply to bring the price growth down, consistent with income growth.
The National Assoication of Realtors projects sales will total 5.26 million this year, the most since 2007!
Purchases of existing homes increased in all four regions, led by a 4.7 percent gain in the Midwest.
Investors are leaving the market and the share of first-time buyers is holding around 30 percent, which means transactions are being driven by existing homeowners looking to relocate as price increases are diminishing short term investment gain for property investors, while a healthy first time home buyer market should be around 40 to 45 percent. I’d expect would-be first time home buyers to begin re-entering the market soon, putting even more pressure on home price, so the longer you wait the less choices you’ll have as the market heats up.
The housing market has strengthened as of late, bolstered by a job market that’s added almost 3 million workers to payrolls over the past year. At 5.3 percent, the unemployment rate is bumping up against the level that Federal Reserve policy makers consider full employment.
Fed officials are monitoring progress in the economy as they consider when to raise their benchmark interest rate for the first time since 2006. In Congressional testimony last week, Chair Janet Yellen said “homebuilding has picked up somewhat lately, although the demand for housing is still being restrained by limited availability of mortgage loans to many potential homebuyers.” However, I’d strongly encourage our blog readers to check out several of your posting in our Google+ mortgage lending communities. We’ve explained many of the best financing options available for many home buyer interested in knowing more about their options before shopping for a home and the read make you a smarter home buyer.
The average rate for a 30-year fixed mortgage was 4.09 percent in the week ended July 16, according to data from Freddie. While that’s the highest since October, it compares with the 6.06 percent average in the five years before the last recession began.
Home builders are optimistic about their industry’s prospects. The National Association of Home Builders/Wells Fargo sentiment gauge held in July at the highest level since November 2005, as the sales outlook climbed to the highest in a decade.
Such attitudes may be prompting them to boost construction, which would help alleviate a dearth of new and existing available properties. Housing starts rose 9.8 percent to a 1.17 million annualized rate, the second-highest level since November 2007, as ground-breaking on multifamily dwellings jumped 29.4 percent..
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