Home Sales Jump
Total existing home sales increased substantially for the month of March, according to a report released by the National Association of Realtors. This impressive increase also reached its highest number in 18 months.
The upcoming selling season and overall housing market health will likely benefit from the heightened interest in homeownership across the U.S., reported Reuters.
Strengthening Economy Likely Boosts Demand for Homes
NAR's report suggests the drastic improvement in available employment opportunities and U.S. economy are likely behind the increased interest in buying a new home. when individuals have confidence in their personal finances they are more likely to invest in a new home. the uptick in existing home sales may potentially be a direct result of this consumer confidence.
"It's consistent with strong growth in the second quarter. We should have a solid spring selling season and should see the housing market continuing to improve through 2015," said PNC Financial Services Group's Senior Economist Gus Faucher, according to Reuters.
Housing Demand Rises
Included in NAR's report are the home sales of various types of existing residences, such as condominiums, single-family homes, townhomes and co-ops. all real estate sales jumped 6.1 percent from the previous month. the total volume of march sales increased to 5.19 million from 4.89 million in february. this is the highest increase seen since september 2013 and indicates greater interest in entering the housing market.
Sales of existing-homes have continued to increase over the course of six consecutive months when compared year over year. Presently, the total number of existing-home sales are up 10.4 percent from the previous year's volume.
First-time buying millennials, return buyers and even baby-boomers relocating after retirement have begun entering the housing market and their interest drives up the demand for housing. As young adults begin families of their own, return buyers restore their credit from the housing crisis in 2008 and baby-boomers look to downsize or move somewhere different, their shifts will boost housing activity and bolster the market. Additionally, housing accessibility has improved to accommodate the needs of these buyers.
First-time buyers certainly fueled an increase in housing activity. NAR's report showed 30 percent of buyers were purchasing their first home in March. This also marked the third time since the share of young buyers was at or above the 30% mark since the previous year.
"After a quiet start to the year, sales activity picked up greatly throughout the country in March," said Lawrence Yun, NAR's chief economist. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."
Available Homes Must Increase to Reach Demand
Currently, the inventory has only increased at a moderate rate.
"The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign," stated Yun. "For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market."
With a higher volume of individuals interested in investing in homes, the real estate industry will likely need to prepare for more jumps in total home sales and even potentially the number of new homes constructed.
The high demand may also indicate that this spring will favor those who are selling their homes.