The housing market remains strong this fall, and it’s poised to remain that way for the rest of the year, notes Jonathan Smoke, realtor.com®’s chief economist. Still, the economy and housing inventory woes may present some challenges in the months ahead.
Total home sales for this year through September have increased 4 percent compared to the same time period in 2015. Existing-home sales are up 3 percent, and new-home sales have surged 13 percent.
“The new-home market is gaining momentum as the existing-home market struggles with very low levels of inventory,” Smoke says. “As a result, new homes represent 10 percent of home sales now; a year ago, they represented only 8 percent.”
Persistent tight supply of housing in many markets has led to stronger-than-normal price appreciation, Smoke notes. Existing-home prices rose a median of 6 percent over last year in September.
“The housing market outperformed the U.S. economy in the first half of the year, as growth in sales and prices was stronger than the growth in GDP,” Smoke writes. “Housing outperformed because of ample demand from buyers who haven’t yet been successful — buyers who just happen to be from the two largest generations in American history.”
Millennials and baby boomers are reaching turning points in their lives. Millennials are getting married and starting families while baby boomers are looking toward retirement. Older millennials – aged 25 to 34 – are representing the largest buying age demographic in the housing market currently, according to the National Association of REALTORS®’ 2016 Profile of Home Buyers and Sellers report.
“A stronger consumer outlook on top of historically high numbers of people turning 30 as well as 65 will provide the support for continued gains in the months ahead,” Smoke says. “The key challenges will be continuing low levels of available homes for sale combined with navigating marginally higher mortgage rates.”
Source: Jonathan Smoke, Realtor.com