The housing market showed signs of stability, steady growth, and gains in inventory in April, making the shaky performance of early 2016 a distant memory.
Home sales are on the rise for the second month in a row, rising almost two percent to a seasonally adjusted annual rate of 5.45 million in April. Current home sales are now above April 2015 levels, a sign of strength for the current market.
There are particular signs of strength in the Midwest where sales skyrocketed. The Midwest has been a booming area for housing, and homes there continue to remain affordable thanks to low mortgage rates.
The momentum is expected to continue across the country as more home buyers typically ramp up their home searches in the summer months.
Buyers who get a jump on the pre-approval process now will not only find super-low mortgage rates but will also be better positioned to negotiate in the fast-paced home sales environment.
More Homes Becoming Available
One of the biggest issues in 2016 was a shortage of homes for sale. Low rates and a healthy market have attracted buyers, but there haven’t been enough sellers to meet the demand.
However, home buyers should feel comfortable know that there are well over 2 million existing homes for sale. This is close to the same number of homes available in April 2015.
April saw an increase of over nine percent in new homes available for sale – the biggest gain of 2016. Added to March’s six percent increase, that’s 15 percent more homes on the market now than there were in February.
With favorable weather and the end of the school year approaching, there is a good chance that more home sellers will enter the market. This could drive home supply even higher than April’s levels. In April, there was a 4.7 month supply, meaning that it would take that long for the currently available homes to sell if no other houses came on the market.
This is a hypothetical scenario since more homes are constantly being added to the housing market. That number has been gradually getting closer to six months which realtors consider “healthy.”
Homes also sold at the fastest pace since June 2015, and they have been getting sold at an increasingly quick clip throughout 2016 As inventory grows, buyers can take more time shopping around and negotiating for the best deal.
Mortgage Rates Holding At Low Levels
The Existing-Home Sales report, published each month by The National Association of Realtors (NAR), reports on the number of existing homes sold each month. It then annualizes the amount based on 12-month sales figures.
The report also tracks home prices. In April, the median existing-home price was $232,500, an increase of about 6 percent from April 2015. That marks 50 consecutive months of year-over-year increases.
Rising home prices are not discouraging buyers, though, thanks to historically low mortgage interest rates that are keeping pricier homes affordable. Mortgage rates are falling faster than home prices are rising, so homes today are more affordable than they were at the beginning of 2016.
Rates have been staying low recently, and there is no sign of them hiking back up to January levels anytime soon.
This bodes well for both buyers and sellers to close home sales quickly, and if more inventory comes into play, it could be quite the busy season.
Starting The Home Buying Process
All signs point to more homes coming on the market, and favorable interest rates are likely to continue. But home prices are still rising, so now is a good time to make some progress by getting mortgage pre-approval.
A pre-approval letter will illustrate to realtors and sellers that you are ready to move forward with a home purchase, and it will give you an idea for home much home you can afford at current rates.