March 28th, 2016 3:09 PM by Brenda Ryan Designated Broker
The first major data report for January is finally here, which gives us a good idea of how the housing market is measuring up this year. 2016 is off to a strong start and things are looking good for the market this year.
Job creation—perhaps the most crucial factor when it comes to housing demand—is on the rise. In January, we saw 151,000 jobs created and the unemployment level is now falling near-decade lows. This goes in line with the current predictions by National Association of Realtors® and should translate into the expected 3% growth in home sales for this year.
The numbers in January on existing home sales are not disappointing. Despite new implementations and procedures slowing down the buying process, the analyst decline predictions have not yet been achieved. On the contrary, existing home sales have grown an impressive 11 percent from January 2015 to January 2016.
The increase in sales results in a continuously tighter supply, which is measured by NAR to be four month in January. This number is rather high, as six to seven months’ worth of homes is considered the norm. If sales continue at this pace, the current inventory of available homes will be sold by May.
This tight supply is driving the prices up, encouraging would-be home buyers to make quick moves. Demand is growing rapidly at the beginning of the year, resulting in a spurt in inventory movement that is typically not seen until March or April.
Unfortunately, the reports aren’t all good news. The biggest negative trend impacting potential demand relates to consumer confidence, which seem to have taken a toll from the January and February stock declines. However, there is no need to stress over the issue now that the mortgage rates are substantially lower.
The tight supply will be a great constraint, but with the positive start and growing numbers, we should expect to see development. Overall, 2016 is looking bright in terms of home sales.