Housing recovery will push forward the pace in the second half of 2015. Increased activity within the housing market has been extremely influential on the price of homes. Home prices continue to increase, yet rates of increase have reached a level of stability and rise at a much slower pace.
Existing home sales were up 9.2% during the month of May in comparison to 2014. New home sales hit their highest level in the last 7 years, as they were also up 20% from the previous year! First time homebuyers are an important factor in housing recovery and this new sale growth, as their action rose from 27% last year to 32% this year. These buyers entering the market allow current homeowners to sell their properties and upgrade to newer homes.
Overall, market activity has been increasing across all demographics. As wages continue to grow and energy prices have gone down, Americans have more flexibility with their money and in turn are spending more. Mortgage rates have increased, yet this has not impacted the forward momentum of housing recovery.
In 2013 and into early 2014, the price of homes escalated at double-digit percentage rates. This appreciation died down before the prices became much higher than the actual worth of a home. The S&P/Case-Shiller home price index rose less than expected last month. The report measures real estate prices and tracks changes in the value of residential real estate. Although home prices are still rising, the rate of increase is not accelerating.
The National Association of Realtors, NAR, released the Pending Home Sales Index in the end of May. The index, according to NAR, is the “leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single family homes, condos and co-ops.“ During the month of May, the PHS reported that home sales rose for the fourth straight month and reached their highest level in nine years!