The existing home market, which had been steadily declining for most of the last year, spiked significantly in February, soaring from just under five million to roughly five and a half million homes at an annualized rate.
The jump represented the biggest such increase since December 2015, when the market was rebounding from a slump that was artificially induced by regulation. This month’s result was a year-long high for the number, though one that is still far below highs set in early 2018 and mid-2017.
The turnaround, according to Lawrence Yun, the chief economist for the National Association of Realtors, is the result of lower interest rates and rising incomes, as well as lower pricing for homes themselves.
“For sustained growth, significant construction of moderately priced homes is still needed,” Yun said. “More construction will help boost local economies and more home sales will help lessen wealth inequality as more households can enjoy in housing wealth gains.”
This development is great news for a housing industry that has been a drag on the U.S. economy for some time now, and it comes on the back of growing concern from within the industry about a lawsuit against the NAR which we discussed at Unicorn Wealth yesterday.
The announcement by the Federal Reserve earlier this week, in which they confirmed that interest rates would remain steady throughout the year, should continue to help the real estate market. Mortgage rates dropped to their lowest level in 13 months as a result of the announcement.
All of this suggests that it’s a good season for home buying, which is developing as spring arrives, right when many are planning moves. That’s good news all around.