Home Sales: Well Above 2014
Here is a look at the latest national home sales numbers. As you can see, 2015 has started off hot.
Traditionally buyers wait for Spring before coming out, but that isn’t the case this year.
Home sales are well above where we were this time last year, and as of right now, we are on a seasonally adjusted pace to sell over 5 million homes this year.
If 2015 continues this pace, this will be the best year in real estate in almost a decade.
Home sales started off slowly in 2014, but that is not what is happening in the current real estate market. The chart below gives a better comparison of each month so far in 2015 compared to the same period last year.
As we move into the Spring and Summer selling season, will we continue to see these numbers?
Based on some reliable indicators, that appears to be the case.
Pending Sales, a measure of the number of homes under contract, continue to increase.
In fact, for 7 consecutive months we have seen an increase in the year-over-year Pending Sales numbers.Pending Sales numbers were the most in February and March since June 2013.
The Home Sales graphs tend to resemble the Pending Sales graphs, only separated by about 60-90 days–this is the time it takes for the Pending Sales homes to become Closed Sales.
In other words, if the Pending Sales graph is trending upwards, then you can expect the Closed Sales graph to reflect that in about 60-90 days.
This is a measure of people actually out looking at homes for sale.
These numbers have been up since the end of last summer.
Usually there is a drop off in the Winter months, but as you can see, that didn’t happen this past Winter.
You can also see the correlation between the higher numbers of Foot Traffic over the last few months and the higher Closed Sales numbers.
Some more good news is the fact that home sales are up across all price ranges, except for homes priced under $100,000.
However, this is another good sign as this price range is mostly made up of distressed sales–foreclosures and short sales.
With the strong sales numbers, how is this affecting home values?
Home values are continuing to increase, partly because of the demand but more so because there isn’t enough homes to meet this demand.
Inventory levels remain low, but there is hope that they will soon narrow the gap between supply and demand.
There is some tangible evidence that we might be headed in the right direction on this.
For the first time in 2015, we saw a year-over-year increase in inventory numbers in March. The previous three months saw a drop in that number.
Sellers that have put off listing have already missed out on the first wave of buyers in 2015.
That said, it is expected to see the inventory numbers increase over the next few months.
Increasing home values should influence more sellers to sell. Not many home owners are in a negative equity position anymore, but there are still some out there.
Increasing home values will allow many more home owners to have the option of selling, whereas before it simply wasn’t mathematically feasible.
In a market where supply isn’t keeping up with demand, the result is an increase in prices.
This is what we are seeing in the market. 2014 started off with double digit appreciation rates. However, around the mid point of last year appreciation rates slowed into single digits.
This was good news. Runaway appreciation is not something that can be maintained for too long. Eventually, there will be a market correction.
This is what lead to the market crash a few years back. Last year, appreciation slowed down closer to the traditional rate of 3%-4% annually.
You may have heard some talk about whether we are seeing another housing bubble.
Based on what happened over the last 6 to 8 months, that is not the case.
However, with inventory levels dropping in 2015, home values have started to accelerate their appreciation rate.
This alone is not a reason to panic, but it is worth keeping an eye on as we go forward.
The latest projections for home appreciation for 2015 vary, but the most optimistic one projects home values to increase 6% this year.
That isn’t anything that should cause concern. Based on the strong demand, and short inventory, that is a good number for home values.
Should we see appreciation rates higher than that, then we might need some concern. But, keep in mind that throughout 2013 and into 2014 we saw double digit appreciation with no ill effects.
So, what do the numbers mean for buyers and sellers?
Rising home prices can be good for buyers–if they don’t delay in buying.
With prices continuing to rise, buyers can feel confident in their investment.
Once they purchase, they then have appreciation working for them, as opposed to against them. This will allow new home owners to build equity faster.
Prospective buyers still see the value of home ownership.
Plus, for many would be buyers, paying a mortgage is cheaper than paying rent.
Rents continue to rise. The percentage of vacant rentals hit a 21 year low at the end of December last year.
Needless to say, that has contributed to rising rents.
Fortunately, for prospective home buyers interest rates remain near their historic lows. This is helping to offset rising prices.
Plus, both Fannie Mae and Freddie Mac recently softened their minimum down payment requirement from 3.5% to 3%.
Additionally, they reduced rates on Mortgage Insurance, lowering monthly mortgage payments for new home owners.
More good news for buyers is that mortgage credit availability continues to increase.
This simply means that lenders are making qualification for buyers easier, and more are being approved.
For buyers, there is a lot of opportunity in this market.
If you want to buy a house, then chances are you can make it happen.
For sellers, it should be obvious. Buyers want your house. The market wants your house.
In fact, the market needs your house. One thing sellers should be aware of is new construction homes. Builders have seen the demand, and are responding.
New homes are tough to compete against, but not impossible. If your home is in great condition, that is a plus.
You also have the advantage of being able to close much quicker. New homes generally take 4 to 6 months to complete building.
Selling still requires you to price your home right, and to make sure it shows the best it can.
You also need to have the best marketing to get your home in front of as many potential buyers as possible.
You can’t just put up a for sale sign and expect to sell instantly, even in a market with such strong demand.
If you are thinking about buying in the Charleston SC area, then visit my Pam Marshall Realtor website.
You can search the Charleston MLS, download Buyer Guides, watch some cool videos, and sign up for a free list of homes that is updated with all the hottest listings.
If you are thinking about selling, then visit my Pam Marshall Realtor sellers page and learn more about my marketing strategies to get your home sold.
If you want to keep up with the latest home sales numbers for Charleston, then visit my Charleston SC Real Estate stats page.