Home Sales to Peak This Year: Best Since 2007

Source: StockMonkeys.com

Great news keeps flooding in for home sellers this year.

A recent report from Freddie Mac economists, reported in Real Estate Economy Watch, indicates that home sales this year are expected to be the best since 2007. With mortgage rates still low, applications to purchase up, and pending home sales on a continuing upward trend, 2015 is looking like an optimal year to sell your home. Here's what Freddie has to say on the matter:

“With spring upon us, housing markets are poised to accelerate and we expect the best year for home sales since 2007. Despite harsh winter weather to start the year, home sales through February are only off from the 2013 pace by 7,000 sales (not seasonally-adjusted). Pending home sales were up 3.1 percent in February to the highest level since June 2013. This marked the fourth consecutive month for rising pending home sales showing positive momentum in general for the housing market. Applications for home purchases have been trending up and with low mortgage rates we expect that to continue over the next few months. By the end of the spring home buying season in June, we should be well above the pace of home sales for any year since 2007."

It is important to note, of course, that our first quarter results weren't exactly as magnificent as expected, and as a result, the GSE lowered their predictions for the 2015 economic growth from 2.8% to 2.6%, and housing starts from 1.18 million to 1.15 million.

Source: Freddie Mac

Luckily, economists still press on, anticipating that the slightly slow first quarter will bolster home sales in the succeeding quarter, keeping the forecast of anticipated home sales for 2015 at an unchanged 5.6 million.

Here is the current state of real estate today, as recently reported in Real Estate Economy Watch:

  • Prices and Mortgage Rates: Housing prices are anticipated to increase 4.0% in 2015, which is an increase from last month's expectations. Lower mortgage rates will additionally boost the refinance volume share of obligations in 2015 to 41%.
  • Inventory and Vacancy Rates: In terms of inventory, vacancy rates vary on a locational basis, though many metro areas with robust job growth and population increases are facing shortages of available for-sale inventory. Chicago fits into this picture.
  • Equity: Despite house price growth over the past 2 years, many homeowners are still owing more on their house than it is currently worth. CoreLogic estimates that about 5.4 million properties (approximately 11% of properties with a mortgage) remain underwater today. Yes, this is down considerably from the peak (once 12.1 million properties or 25.2%), but nonetheless still represent a significant amount of housing stock. These homeowners are typically more unwilling or unable to sell their home, which poses market complications.
  • Housing Construction: Housing construction, though up from January 2011, is still well below a sustainable pace, contributing to a lower level of for-sale inventory.
  • Rates: Freddie predicts mortgage rates will climb over the next 6 months, with a special anticipation of an increase near the end of 2015. The best time to buy a new home is now.

Questions? Looking to get active in the market? Don't hesitate to send us an email or give us a call! We'll be happy to help.

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