According to the National Association of Realtors, the volume of total existing-home sales will most likely finish out 2015 at an especially impressive pace. The consistently improving real estate market conditions in conjunction with a better economy and improved sense of job security is expected to encourage more potential buyers to purchase new homes.
As more individuals decide to make the transition to homeownership and housing activity blossoms, the market will continue to improve.
Existing-Home Sales Expected to Rebound Substantially
While in the past experts may have been concerned that the affordability of available homes may impact people's decisions to enter the market, these concerns are being laid to rest. Economists at NAR anticipate total home sales to reach a pace not seen since 2006. Many experts feel confident in the health of the market and demand for housing options.
"Sustained job growth and interest rates below 4 percent have been the catalyst behind the improvement in sales," said Lawrence Yun, NAR's chief economist. "The demand for buying is especially strong in parts of the country where jobs gains and economic activity have outpaced the rest of the nation - particularly in states like Utah and Florida and cities such as Denver."
Yun continued predicting that home sales will likely finish out the year with approximately 5.3 million units. He expects this increasing trend to continue into 2016 with a total volume of 5.5 million units in sales.
Rising Rent Also Plays a Role in Increasing Demand for Housing
Zillow, an online real estate company, indicated in a home prices and values report that the median price for rent in the u.s. jumped 4 percent in April when compared on a year-over-year basis. While rent has been climbing for quite some time, this is the most substantial increase noted since March 2013.
Current renters may become increasingly more interested in purchasing a new home, especially as rental rates continue to climb. Home mortgage payments will help individuals build equity while paying a landlord rent each month does not provide an individual with the same time of valuable investment.
A jump in renters deciding to enter the housing market and purchase homes would also boost the average value of homes as demand controls the price of supply. This increase is expected by many experts.
Prices to Rise for Homes Available in the U.S.
Median home prices will likely increase in conjunction with a higher demand for inventory. The median selling price for real estate may increase by the end of the year by approximately 6 percent, and the rise will probably slow down slightly to 4 percent the following year.
When inventory is low and demand is high, prices are sure to rise. If the current trend continues, the value of homes will maintain this pattern and steadily climb. However, more housing construction has the potential to keep the market strong, healthy and more affordable.
"Housing supply needs to increase measurably to meet the pent-up demand for buying," stated Yun, according to NAR. "To put it in perspective, there were 37 million more people in the U.S. last year compared to 2000, yet existing-home sales that year were higher (5.2 million) than last year (4.9 million)."
Fortunately, an increase in housing starts occurred in April. This will help meet the demands of buyers.
Housing Starts Climb During the Month of April
A press release published on May 19 by the National Association of Homebuilder indicated housing starts across the U.S. grew 20.2 percent when compared to the previous year. This puts the total at1.135 million new units in April.
The two housing sectors both saw jumps in production during the month. Single-family housing starts climbed 16.7 percent to 733,000 new units and multifamily residential starts rose an impressive 27.2 percent to 402,000 new units.
"The April gains make up for the production dips we saw in the past two months, but single-family housing is still only about halfway back to what could be considered a normal market," said NAHB's Chief Economist David Crowe. "With low interest rates and affordable home prices, we expect more upward momentum in the months ahead."
Gains Seen in Nearly Every Region
The South was the only area that did not experience an impressive gain in total housing starts in April. However, it still saw permit gains of 38.8 percent which bodes well for the future.
The Northeast saw an overwhelming 85.9 percent increase in housing starts, the West jumped 39 percent and the Midwest rose 27.8 percent.
Permit issuance also jumped 10.1 percent in April to 1.143 million. Total multifamily permits gained 20.5 percent and single-family permits rose 3.7 percent.
The activity various sectors of the housing industry are seeing bodes well for the future of the U.S. real estate market.
With a continually strengthening national housing industry, local markets will also improve as the year continues.