With the start of the spring buying season in full swing, one of the top wild cards for the housing market in coming months will be how both buyers and potential sellers adjust to the steady climb in mortgage rates since late last year. Prospective buyers continue to feel the strain of swift price growth – up 5.9 percent so far in 2018 – and the higher borrowing costs will only add to the pressures placed on their budget. Meanwhile, more would-be sellers deciding to balk at listing their home for sale out of uneasiness of losing their low mortgage rate – especially if they refinanced in recent years – would not be good news for any alleviation of the ongoing supply shortages in much of the country.
“Homeowners are already staying in their homes at an all-time high before selling, and any situation where they remain put even longer only exacerbates the nation’s inventory crunch. Even if new home construction starts picking up at a faster pace this year, as expected, existing sales will fail to break out if these record low supply levels do not recover enough to meet demand.
For the year, NAR President Yun forecasts for existing-home sales to be around 5.51 million – flat from 2017. The national median existing-home price is expected to increase around 4.2 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.8 percent.
Pending home sales in the South rose 3.0 percent to an index of 125.7 in February, but are 1.5 percent lower than last February.
The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
According to NAR’s 2017 Profile of Home Buyers and Sellers, the median tenure a homeowner stayed in their home before selling was 10 years (an all-time survey high since 1981).
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.