The first quarter of 2019 for home sales suggests that the spring housing market will provide a great opportunity to purchase a home.
Traditionally, spring is the season homebuyers begin to make their search, although it varies nationwide. However, with the home shopping season beginning in March, current market reports suggest more options for those looking for their new or first home. Nationwide and in major metropolitan areas, many cities face a housing shortage in which the stock of available homes are not enough to meet the demand of buyers searching for real estate. 2019 shows favorable reports — although the severe inventory shortage may increase slightly in affected areas.
Housing inventory increase suggests more selection for homebuyers
The housing market nationwide is heating up, yet it may be more favorable for buyers as the housing stock has had a slight increase. Zillow projects that for the first time in five years, buyers have more home selections, according to its January 2019 Market report. The U.S. sales home inventory increased by 1.2 percent from 2018, indicating one of “the largest inventory increases seen” with competitive markets on the west coast.
According to Zillow, the average U.S. home valued at $225,300 in January, about 7.5 percent more than in 2018.
“January marked the reversal of a longstanding trend in the housing market – a modest annual gain in for-sale inventory last month means that for the first time in at least a half decade, the U.S. housing market began the calendar year with more homes available for sale than the year prior,” Zillow wrote in a Feb. 14 article.
As of January, Zillow had more than 1.6 million home listings on its site, suggesting the “first annual gain recorded in January since prior to 2014, according to the January Zillow Market Report. Bankrate suggests that experts predict housing starts to increase by around 2.5 percent. “Although those are modest gains, when coupled with a strong job market and increasing wages, buyers will have a little more momentum going into the buying season,” Natalie Campisi wrote.
The National Association of Realtors survey suggest that buyers feel more optimistic about the economy, and more than 53 percent of respondents felt the economy is improving — a decrease of 6 percent from last year. Another factor that may prove favorable for homebuyers is the stability of prices in the housing market. Chief economist Lawrence Yun, Chief Economist for the National Association of Realtors said several factors are helping to improve the attitudes of potential homebuyers.
“First, inventory has been rising, so those buyers interested in making a purchase will not be limited in choices,” Yun said. “Additionally, more stable home price trends are leading to more foot traffic at various open house gatherings”
Economy improving means more jobs, more buying power for homebuyers
The current U.S. unemployment rate for March 2019 stayed at 3.8 percent — the same as February 2019. However, the unemployment rate has stayed at an all-time low. For March, the number of unemployed persons dropped by 24,000 to 6.2 million while employment dropped by 201,000 to 156.7 million. Although these numbers suggest decreases, the U.S. job rate continues to hold steady, according to the Bureau of Labor and Statistics.
Around this time in 2018, the unemployment rate hovered around 4.1 from January to March. The Bureau of Labor and Statistics suggests that more than 196,000 jobs were created in March 2019. This proves favorable for homebuyers as they may have more purchasing power and ability to buy homes.
“Places like Lakeland, Florida, which are commutable to larger metro areas like Tampa, boast significantly lower home prices than their larger counterparts,” Bankrate wrote. “The median home price in Lakeland is about $170,000 compared with Tampa’s $261,000 median home price.”
Realtor.com suggests that this year’s spring housing market is heading into a cooler market from 2018 as the rate of inventory increase has decelerated.
“Housing inventory continues to increase both locally and at the national level, albeit at a slower pace than that seen earlier this year,” Realtor.com’s March report suggests. “The national inventory grew by 4 percent year-over-year in March, amounting to approximately 56,000 additional listings, and housing inventory in the 50 largest U.S. metros grew by 9 percent.”
Lower mortgage rates to heat up spring homebuying
The mortgage rates for spring may yet heat up homebuyers’ urge to purchase. Rates are hovering around 4.5 percent and are not expected to rise much more this year. The 30-year fixed mortgage rate dipped to 4.28 percent from 4.29 percent, according to Bankrate, reaching a near 15-month low. The 15-year rate dropped from nearly 4 percent in January to about 3.65 as of April 12.
Bankrate predicts at the current rates for a 30-year fixed rate mortgage, homebuyers will pay close to $493.70 per month for every $100,000; for a 15-year fixed rate mortgage, will pay about $722.27 per month for every $100,000; and for the 5/1 ARM rate, homebuyers will pay about $480.30 per month for every $100,000 borrowed.
Housingwire stated that because mortgage rates unexpectedly began declining at the beginning of the year this may stoke demand by bringing more buyers into the housing market.