Signs Now Point to a ‘Sustainable’ Recovery
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Last year, the spring selling season failed to meet market expectations, but many housing analysts say that 2015 will be different and the market may have finally reached a long-awaited “sustainable recovery.”
In cities that have seen major job growth, home sales surged to double-digit gains in March year-over-year. For example, Seattle has seen a 17.7 percent increase in sales year-over-year and a 20.3 percent sales gain has occurred in Charlotte, N.C. In Jacksonville, Fla., sales of existing homes were up 18 percent in March year-over-year.
“It feels like 2005 again,” Sanford Davidson, a Redfin real-estate agent in Jacksonville, told The Wall Street Journal. “Homes are moving that quickly, especially if they’re in the right neighborhood and priced right.”
Home sales are expected to post further gains across the country too, according to the National Association of REALTORS®’ pending home sales index, which tracks signed home contracts. The pending home sales index in February surged 12 percent year-over-year. Pending sales were up 30.6 percent in Houston; 30 percent in Jacksonville, Fla.; 27.8 percent in San Diego; 24.2% in Seattle; and 23.7 percent in the Riverside and San Bernardino markets in California.
Sales of newly built homes in February reached its strongest pace in seven years. New-home starts were at a seasonally adjusted annual pace of 539,000 in February, the Commerce Department reported.
The uptick in home sales in recent months is early indication that the “market is continuing to improve at a very steady pace,” Stuart Miller, chief executive of Lennar Corp., said in a conference call with investors last month. The nation’s second largest homebuilder reported an 18 percent sales gain in the quarter ending Feb. 28, compared to a year earlier.
Last year, the spring selling season failed to meet market expectations, with sales of new and existing homes in 2014 mostly flat. The dismal selling season last year was most attributed to, at the time, continued weak consumer confidence, steep home price increases from the previous year, and an uneven economic recovery, The Wall Street Journal reports.
But housing analysts believe 2015 is different. Here are a few reasons why:
- An improved economy: The economy has added 3.1 million jobs in the past year alone. Also, low gas prices lately have helped to lift consumer confidence.
- Mortgage lending is easing: Lenders have shown signs of easing tight borrowing requirements and costs (see FHA Lowers Its Mortgage Costs and 3% Down Payments May Be Game Changer).
- Boomerang buyers return: Former home owners who had lost their home to foreclosure in the aftermath of the financial crisis have repaired their credit and many are stepping back in to try to qualify to buy a home again.
Source: “Housing Market Sees Hopeful Signs of Spring,” The Wall Street Journal (April 9, 2015)
