On Thursday it was announced by the National Association of Realtors, that just last month, home sales increased by 2 percent, the fastest rise since 2007.
Over the past 12 months, home sales have gone up 9.6 percent and the number of homes listed for sale have dropped 4.7 percent in that same period, according to ABC.
The changes are in part due to the steady job growth and low mortgage rates that have encouraged current homeowners to purchase homes while keeping first-time buyers at a distance.
At this time, the housing market contains only 4.8 months’ supply of homes forces prices to rise for an increasingly narrow amount of properties available.
After six-years of a slow recovery from the Great Recession, the housing market is finally being revitalized. As more current homeowners are returning to the real estate market for an upgrade or to downsize while approaching retirement, home sales have sky-rocketed.
But this upswing in the market also marks a downside for first-time homebuyers that can’t afford to buy in this market.
“When first-time homebuyers compete with people who are more qualified borrowers that have additional cash, they tend to lose,” said Budge Huskey, chief executive of the real estate brokerage Coldwell Banker.
In just the past 12 months, the median home price has increased 5.6 percent to about $234,000. First-time home buyers use to make up at least 40 percent in sales, but last month, only 28 percent of homes sold were to their group.
The price appreciation has been absorbed by many current homebuyers with equity as they look to buy another home. But the two big factors adding to this explosion in sales are: 1. There have been over 2.9 million jobs added to the economy in the last 12 months and 2. The average 30-year fixed mortgage rate has stayed at around 4 percent. Mortgage rates, being at around two percentage points lower than the historical level, has also reduced monthly borrowing costs for buyers.
And moving forward, what does this mean for mortgage rates and sales? Nobody is quite sure.
