Entering real estate’s traditionally busiest time of year, the housing market is being buoyed by a stronger economy and consumer confidence. Job creation is 30 percent stronger this year compared to a year ago, unemployment is near a 9-year low, and wages and incomes are growing at the largest levels in about eight years, notes Jonathan Smoke, realtor.com®’s chief economist.
Some buyers are in more of a hurry this season too. In the last two weeks, the 30-year fixed-rate mortgage rose by nearly a quarter of a point. The Federal Reserve also has given strong indication that it plans to raise short-term rates later this week (even though mortgage rates aren’t directly tied to short-term rates, they do tend to have an influence). Smoke predicts three to four major increases in mortgage rates this year. He expects rates to rise by from 10 to 25 basis points in one- to two-week spurts, followed by some holding patterns.
“The upside of higher rates is that it is getting easier to get a mortgage,” Smoke says. Mortgage credit access has increased 6.5 percent since September, the Mortgage Bankers Association reports.
“Arguably the biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract,” Smoke says. “That’s because the supply of homes for sale is at an all-time low, and yet demand is strong and getting stronger.”
In January, the nation saw the lowest inventory of homes available for sale ever at realtor.com®. Inventory did manage a 2 percent increase in February, but it’s still down 11 percent compared to last year.
With lower inventories and higher demand, homes are selling faster. Twenty-seven percent of listings sold in less than 30 days in February, according to realtor.com®’s data.
“The early birds who decided to buy in the winter faced less competition and enjoyed lower rates than we are seeing now,” Smoke says. “It gets more expensive and more competitive going forward, but the early-ish buyer, at this point, is still likely to come out on top, when you consider that prices and rates are likely to be much higher later in the year.”