In the midst of the traditionally-busiest homebuying season of the year, mortgage rates, home prices, sales paces and inventory are quickly shaping the housing market into what realtor.com Chief Economist Jonathan Smoke is calling “the strongest and healthiest real estate market we have seen in a decade”.
If you’re planning on or thinking of purchasing a home in the near future, here are six trends currently molding the market.
Mortgage rates are still near yearlong (and historic!) lows.
At the beginning of April, the national average of mortgage rates fell to their lowest level since February 2015, inciting further incentive to buy or refinance in 2016.
But home prices are rising, too.
While mortgage rates are still favorable, homebuyers may face affordability issues as home prices continue to gain traction. In the latest existing home sales report from the National Association of Realtors, the March median sales price increased 5 percent from the previous month to $222,700. Apart from spring 2015, this is the highest median sales price of the recovery.
Regardless of price, homes are moving quickly.
According to the National Association of Realtors, the median amount of days between a listing and contract was 67 days for the month of April, which is down 8 percent from a year ago and down 9 percent from March.
Limited inventory is creating a seller’s market.
According to the latest data from realtor.com, April’s median listing price reached a record high of $247,000, up nine percent year-over-year. Higher prices have helped pull listings and move-up buyers into the market.
The annualized rate of inventory increased nearly 6 percent in March, but year-over-year inventory is down 1.5 percent.
But all-cash buyers may not be much of a threat anymore.
Cash buyers have been a force to be reckoned with throughout the recovery, but in 2015, cash sales accounted for only one third of total home sales, which is the lowest share since 2008.
According to Core Logic, cash sales peaked in January 2011, comprising nearly half of home sales nationally. If cash sales continue their downward trend, Core Logic predicts that the share will reach the average rate of 25 percent by mid-2017.
Urbanites are headed to the ‘burbs for affordability.
Home prices climbed in 87 percent of U.S. metros during the first quarter of 2016, according to the National Association of Realtors. Steep prices coupled with limited listings have been pushing city-dwellers to the suburbs.
This trend is especially true for Millennial homebuyers, who once placed a good deal of importance on being close to urban necessities and entertainment.
Mortgage rates are extremely favorable, but home prices are climbing along with buyer foot traffic. If you’re thinking of purchasing a home this spring or summer, the smartest thing you can do is to meet with a mortgage banker for a loan commitment, which carries cash-offer power and gives you peace of mind and an expedited loan process.
For more information about buying your first home, download our free Mortgage 101 Handbook for everything you need to know about financing and purchasing a home.