Real Estate News

Home sales could mean happy times ahead for buyers and sellers

Published: 31 Mar 2017

At the end of March, new the National Association of Realtors released new details about the pending home sales figures from February. This information could show important trends on the horizon as the housing market enters its second quarter for 2017. It meshes with the NAR's previous assertions about the possible optimism of the current housing market.

What the figures say
The association specifically announced a 5.5 percent increase in pending home sales, which it dubbed both a "sharp" change of pace and a historic one, since it represents the highest measure for this metric in almost a full year. The figures, which specifically come from the organization's Pending Home Sales Index, tracks sales throughout the country over the previous 12 months.

Using all of this information, the source noted that the Index was at 112.3, the closest its been yet to the recent high of April 2016, when it read 113.6. It was also an obvious climb from the previous month's 106.4 rating. The next update will come on April 27, revealing the information for March and perhaps continuing the trend.

Sustaining growth
In the NAR's official statement on these figures, chief economist Lawrence Yun connected this Index with other signs of possible economic growth. At the same time, he also hinted at the conditions that would need to change to make the housing market's sales success continue.

"The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy," he said. "The country's healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply."

Concerns about affordability and inventory clinches have appeared in different sources, but the recent figures may have translated to possible optimism. The NAR has also expressed similar hope based on the possibilities for millennial buyers to take more of an active role in buying.

Other factors
Along with these sales stats, there may be other indicators of a strong bedrock for housing in the spring, whether or not it actually comes to fruition.

  • Favorable weather: Reuters quoted economist Joseph Kirchner, who said that more construction has occurred due to the warmer weather this winter. With construction could come the chance to alleviate some worries about inventory shortages if these properties go to market.
  • Greater USD trading value: The same source referenced the overall value of the dollar in trading terms. Signs of economic stability may add to the continued narrative of a strong housing resurgence.
  • Mortgage applications: The actual rates for applications have changed over the weeks, shifting from upward to downward trends relatively quickly. Although the March 29 Mortgage Builders Association weekly survey said the Market Composite Index had dipped, it followed not long after a previous release claiming the opposite. That earlier notice, from March 15, said that the amount of mortgage applications grew by 3.1 percent in the span of a single week, as measured by this same index. It also alleged that Adjustable Rate Mortgages accounted for 8.2 percent of all of these applications, perhaps further evidence of their popularity.

​Predicting the near future
In some cases, these statistics may correspond to the 2017 housing forecasts from various sources. Growth was, unsurprisingly, on the minds of several making predictions. Redfin, for example, said that 2017 would see a larger market by the end of the year, with a 5.3 percent increase in home sales prices overall for the entirety of 2017.

Tempering the growth, the company remarked , would be affordability challenges for homes, with the less expensive properties fading out. This comes with the wild variability of demand, which the source said could change from week to week.

Between November 2015 and 2016, the source said the overall demand index rate only showed a difference of eight points. This doesn't tell the whole story, though, since looking at the chart shows a jump above 120 in September, 2016, before heading back down to the aforementioned November rate.

Redfin also referenced the importance of cities in home availability, which seems to be echoed by other similar predictions from around the same time. This could also reflect the desires of millennials, as the demographic chooses metro areas across the country to live in.

More recently, on March 28, the same company said that this index was at the 118 level in February, representing a four-year high. Referring to these figures, Redfin's chief economist Nela Richardson said that the scarcity of supply could continue to be an issue as demand grows this year.