Great news for those trying to sell their house: the number of contracts signed for buying homes is the highest of the last 18 months. This is a good sign because it shows that although a slow start, the sales process will rise later this year.
On Friday, February 27, the National Association of Realtors reported that the pending home sales index saw an increase of 1.7 percent thus reaching 104.2 in January. In December 2014 there was a slight drop of 1.5 percent, a better result than what was initially estimated (3.7 percent). It was still a reason for concern as many though the business would continue the weak evolution saw in 2014.
Fortunately, this did not happen as the index is currently 8.4 percent higher than the 2014 value. A higher level was last obtained in August 2013. This means that the sales of existing homes will slowly start to increase in the next few months, especially as the spring buying season is close by.
Chief U.S. economist at High Frequency Economics, Jim O’Sullivan considers that “the trend in home sales is probably up modestly at least”.
The highest rise in signed contracts took place in the South, where an increase of 3.2 percent was observed. The West follows with an increase of 2.2 percent in sales. In the Northeast, sales went a bit slower, probably due to the snowfall, with an increase of only 0.1 percent. The Midwest experienced a 0.7 percent drop in sales.
In the sales of new constructions (both homes and apartments), a 2 percent fall was recorded in January.
Economists are also expecting that the increase in employment, low mortgage rates and the strong consumer confidence will encourage the sale of homes this year.
There are 3.2 million more American employees than there were last year and many of them are young adults that, due to their new gained economic stability, will feel encouraged to start looking for a place of their own. First-time buyers are a very important aspect when it comes to housing improvement.
Mortgage rates continue at a minimum level. Last week, the standard 30-year fixed mortgage rate was reported at 3.76 percent in comparison to the 4.33 percent in 2014.
Image Source: Buffalo Niagara Real Estate Home Sales