The residential real estate market is on track for its best year since 2006.
Job growth is powering the surge in demand for homes. More than 3 million jobs have been made in the past year, as well as more than 1 million for the 25-34 year olds, the age range where most Americans buy their first home. With this rising demand, homes are selling more quickly. For example, in May, the average homes on the market nationwide was 66 days, and that’s 8 days faster than last year. The hottest markets are seeing inventory move 18 to 45 days faster.
Meanwhile, rents are increasing at a similar or even stronger pace than home prices. Record numbers of renting households have driven down apartment vacancies, and low vacancies lead to higher rents. It is now cheaper to buy a house (if you can afford it) than rent in 80% of the counties in the U.S.
And now the clock is ticking as mortgage rates are on the rise. With strong employment data from April to May, the average 30-year fixed mortgage rate broke through the 4% level. Consumers can clearly see that affordability is going down, so those who are ready and able to buy are searching for homes.
In April, new-home sales were up 26% over last year. Pending home sales were up 14%. At this level of growth, total home sales in 2015 could come close to 6 million. We’re expecting more good things to come this year for our housing market.
