It is common knowledge that a large number of homes sell during the spring-buying season. For that reason, many homeowners hold off on putting their homes on the market until then. The question is whether or not that will be a good strategy this year. The other listings that do come out in the spring will represent increased competition to any seller. Do a greater number of homes actually come to the market in the spring, as compared to the rest of the year? The National Association of Realtors (NAR) recently revealed the months in which most people listed their homes for sale in 2016. Here is a graphic showing the results:
The three months in the second quarter of the year (represented in red) are consistently the most popular months for sellers to list their homes on the market. Last year, the number of homes available for sale in January was 1,820,000.
That number spiked to 2,140,000 by May!
What does this mean to you?
With the national job situation improving, and mortgage interest rates projected to rise later in the year, buyers are not waiting until the spring; they are out looking for a home right now. If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition for a buyer.
It may make sense to beat the rush of housing inventory that will enter the market in the spring and list your home today.
We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now continues to be a great time to sell your house. Let’s look at the data covered by the latest Pending Home Sales Report and Existing Home Sales Report.
THE PENDING HOME SALES REPORT
The report announced that pending home sales (homes going into contract) are up 2.4% over last year, and have increased year-over-year now for 22 of the last 25 consecutive months. Lawrence Yun, NAR‘s Chief Economist, had this to say:
“The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country. It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices.”
Takeaway: Demand for housing will continue throughout the end of 2016 and into 2017. The seasonal slowdown often felt in the winter months did not occur last winter and shows no signs of returning this year.
THE EXISTING HOME SALES REPORT
The most important data point revealed in the report was not sales, but was instead the inventory of homes for sale (supply). The report explained:
- Total housing inventory rose 1.5% to 2.04 million homes available for sale
- That represents a 4.5-month supply at the current sales pace
- Unsold inventory is 6.8% lower than a year ago, marking the 16th consecutive month with year-over-year declines
There were two more interesting comments made by Yun in the report:
“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in. Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand.”
In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values. As Yun notes, we are, and will remain, in a seller’s market with prices still increasing unless more listings come to the market.
“There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring. The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate.”
Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market. Prices will continue to rise if a ‘sizable’ supply does not enter the market.
If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out looking for your house.
The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index. Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).
The darker the blue, the stronger the demand for homes in that area. Only four states came in with a weak or moderate demand level.
The Index also asked: “How would your rate seller traffic in your area?” As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.
Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, meet with a local real estate professional in your area who can help you capitalize on the demand in the market now!
Thinking of selling your home? Why not start preparing now to make your property show in the best light. Here are some tips: declutter, neutralize, clean, purify, define and enhance.
Sellers usually have goals in mind when selling their home, which consist of: selling the property for the highest price/market value, in the shortest amount of time/within a certain time frame and hope that process is as stress free as possible. Statistically speaking, in Listing with a Real Estate Agent, homes sell for more money, are on the market for less time and there is less stress on the seller. Hiring an experienced and professional Agent in your Agent affords you the knowledge, know-how and team needed to help you in your home sale.
Looking to buy or sell a property in the Chicago suburbs, city or anywhere in the United States? Contact us today. We have local market expertise with national real estate connections and we can help you, or help you find a real estate professional throughout the United States.
Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade, according to the National Association of REALTORS®. All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, hiked up 5.1 percent to 116.3 in April from an upwardly revised 110.7 in March and is now 4.6 percent above April 2015 (111.2). After last month’s gain, the index has now increased year-over-year for 20 consecutive months.
Lawrence Yun, NAR chief economist, says vast gains in the South and West propelled pending sales in April to their highest level since February 2006 (117.4). “The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,” he says. “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”
On the topic of mortgage rates, which have remained below 4 percent in 16 of the past 17 months, Yun says it remains to be seen how long they will stay this low. Along with rent growth, rising gas prices – and the fading effects of last year’s cheap oil on consumer prices – could edge up inflation and push rates higher. For now, he foresees mortgage rates continuing to hover around 4 percent in the coming months, but inflation could potentially surprise the market and cause rates to increase suddenly.
Adds Yun, “Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search.”
Following the housing market’s best first quarter of existing-sales since 2007 (5.66 million) and a decent increase (1.7 percent) in April, Yun expects sales this year to climb above earlier estimates and be around 5.41 million, a 3.0 percent boost from 2015. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to between 4 and 5 percent.
The PHSI in the Northeast climbed 1.2 percent to 98.2 in April, and is now 10.1 percent above a year ago. In the Midwest the index declined slightly (0.6 percent) to 112.9 in April, but is still 2.0 percent above April 2015.
Pending home sales in the South jumped 6.8 percent to an index of 133.9 in April and are 5.1 percent higher than last April. The index in the West soared 11.4 percent in April to 106.2, and is now 2.8 percent above a year ago.
“This report rounds out a triple crown of April home sales reports with existing home closings, new pending contracts, and new home sales all solidly up as the spring buying season ramped up,” says realtor.com chief economist Jonathan Smoke. “Across these metrics, the pace of total home sales is up more than 10 percent over last year, putting 2016 in the pole position to earn the standing of the best year in a decade.”
For more information, visit www.realtor.org.
- Both New Home Sales and Existing Home Sales are up month-over-month and year-over-year.
- Inventory remains low which continues to drive home prices up as demand continues to exceed the 4.7-month inventory.
- The median price of new homes is up 12% from March 2015, while the median price of existing homes is up 6.3% from April 2015.
In their current edition of the Home Price Expectation Survey released last week, Pulsenomics asked this question of the 100+ economists, real estate experts and investment & market strategists they surveyed:
“In your opinion, what is the primary driver of recent home value growth in the U.S.?”
Here are the top four reasons given by those surveyed:
As we have stated before, the current lack of inventory in most housing markets has caused home appreciation to increase at greater percentages than historical averages. This means that this is a great time to sell your home as supply is low and demand is high.
However, things may be about to change…
The fortuitous situation sellers see themselves in may soon change for three reasons:
- As more homeowners realize their equity situation has dramatically improved over the last four years, they will be more likely to put their homes on the market.
- With the residential real estate sector outperforming a sluggish economy, more home builders will be looking to add new construction inventory to a depleted supply of housing stock.
- Many banks are just now foreclosing on loans that have been delinquent since the housing bust. These houses will also be coming to market.
According to Daren Blomquist, senior vice president of RealtyTrac, in the Q2 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report:
“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory.”
In most housing markets, don’t wait for this additional competition to hit the market. If you are considering selling your house, now may be the time.
( source )