Sales of existing homes went up in July by 2.5% over June and had the first year-over-year increase in more than a year reports the National Association of Realtors. Due to historically low-interest rates and low mortgage rates, home sales have increased this summer. The sales have increased despite some indications that the economy as a whole may experience some issues.
Keys to Sales Growth
Growing sales inventory in the lower end of the housing market were key factors to June’s sales growth.
In July, the median price of previously owned homes sold in grew by 4.3% year-over-year, to $280,000. Although several metropolitan areas have witnessed price increases amongst the lower half of the local home market above 100% since 2012. Take, for example, the Atlanta-Sandy Springs-Roswell metropolitan area, the bottom half of homes sold for 165% more in 2018 than they did in 2012. Other areas including Denver, Tampa Bay, and Miami saw comparable trends during the identical period. This trend indicates that affordable homes are still in demand across the country.
Low Inventory Effects Home Sales
The inventory of moderately-priced homes is inadequate and more home construction is needed. It is possible that new apartments could be transformed into condominiums which would help with supply issues. These changes are seen in the light of new federal rules that permit broader use of Federal Housing Administration (FHA) mortgages to purchase condominium properties.
Sales inventory declined overall in July to 1.89 million existing homes, 1.6% below levels during the same period last year.
Decline in Mortgage Rates Boost Home Sales
Declining mortgage rates are thought to have driven a recent expansion of home sales and refinancing activity, that gives real estate agents and mortgage lenders a much-needed boost in revenue; but the low rates are strictly related to falling bond yields and other data which economists view as a warning sign that a recession is coming. Continued warnings of a potential economic slowdown have chilled business confidence, in contrast to continuously robust sentiment and spending activity in the U.S. consumer sector. There is concern among some real estate experts how long that dynamic will continue.
Mortgage rates are an essential factor to consumers, but confidence in the nation’s overall economic outlook is also a factor to be considered. Purchasing a home is an important long-term decision and currently low, and possible lower mortgage rates in the future by themselves may not meaningfully boost sales unless supplemented by increased consumer confidence.
If you are in the greater Tampa Bay Area and are considering purchasing a home, call me at 813-915-6649 or email me at [email protected]. I have years of experience and the knowledge to advise you on current real estate trends and what it takes to purchase a home. Make an informed decision when you purchase your home, call me today.
