U.S Home Sales Projected to Reach Decade High in 2016

U.S. home sales should climb in 2016 to levels we haven’t seen since the last housing boom — with millennials leading the charge — as continued economic prosperity appears to be on the horizon.cb

In its 2016 Housing Forecast, Realtor.com projects that new and existing home sales will reach 6 million in 2016, the highest level since 2006. According to the report, home starts will see a 12 percent annual uptick, while sales of new homes will grow by 16 percent year over year. Home price appreciation will moderate to 3 percent next year, which Realtor.com Chief Economist Jonathan Smoke says signifies that the housing market is normalizing.

Millennials — defined here as those ages 25-34 — are expected to make up the largest percentage of homebuyers in 2016, spurred on in part by growing incomes. Generation Y buyers are most concerned with neighborhood safety and home-construction quality, and they also want a reasonable commute.

Having rebounded from the recession, Gen Xers on the younger side of the spectrum (ages 35-44) will account for the second-largest pool of buyers. Two-thirds of this demographic are move-up buyers and will be trading up for a larger property or a nicer neighborhood.

Older Americans ages 65-74, the third-largest projected buyer demographic, will look to do the exact opposite, selling their spacious homes for smaller, newly constructed ones. These homeowners are expected to put their properties on the market in March or April and will place an emphasis on customization when searching for their next home.

Realtor.com predicts the U.S. economy’s health to hold in 2016, with the GDP increasing by 2.5 percent, up from 2.1 percent growth in 2015. Unemployment will decline from 5 percent at the end of 2015 to 4.8 percent by the end of 2016, while the number of jobs created — 2.5 million — will remain roughly unchanged. The forecast warns that tougher access to credit and rising home prices could ultimately stifle demand for housing and temper the benefits of the thriving economy.

(Photo: Flickr/Sean Creamer)

Source: Pacific Union

First-Time Buyers Help Boost U.S. Home Sales in May

 

Thanks in part to a healthy job market, first-time buyer activity is on the upswing and helped propel U.S. existing home sales to the highest level in five-and-a-half years last month.money fence_sm

In its latest existing home sales report, the National Association of Realtors says that first-time buyers accounted for 32 percent of all U.S. home purchases last month, up from 30 percent in April and 27 percent from one year ago. First-time buyer activity is now at its highest level since September 2012.

“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down-payment programs,” NAR Chief Economist Lawrence Yun said in a statement accompanying the report. “More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

First-time buyer activity helped push U.S. existing home sales – which includes single-family homes, condominiums, townhouses, and co-ops – to 5.35 million in May, the most since November 2009. Home sales rose 5.1 percent from April and 9.2 percent from one year ago.

The median U.S. home price climbed to $228,700, the 39th consecutive month of year-over-year gains. Yun noted that the U.S. housing supply remains constrained and that prices will likely stay high without sufficient levels of new construction. In May, the U.S. months’ supply of inventory (MSI) was 5.1, meaning that the housing market still favors sellers. Tight inventory conditions mean that homes are also selling relatively quickly – an average of 40 days in May, the third fastest pace since NAR began tracking that metric four years ago.

In California and the Bay Area, supply conditions are considerably tighter than they are nationwide, and homes are selling at an even brisker clip. According to the California Association of Realtors’ latest home sales and price report, the statewide MSI for single-family homes was 3.5 in May, unchanged from the previous month. Homes sold in an average of 28.5 days, faster on both a month-over-month and year-over-year basis.

Six Bay Area counties had the fewest homes for sale in California in May, with the MSI ranging from 1.7 inSan Mateo County to 2.3 in Marin County. Across the nine-county Bay Area, homes sold in an average of 20.9 days, with San Mateo (17.1 days), Santa Clara (17.5 days), and San Francisco (19.2 days) counties the state’s quickest-moving real estate markets.

(Photo: Flickr/Tax Credits)

Source: Pacific Union