Good news in the real estate market coming into 2018. Last year’s Pending Home Sales Index (PHSI) reported an uptick of 0.5% in December. It’s now at 110.1, which is the highest it has been since March of last year.
The PHSI is based on pending sales of existing homes. This means the activity of signed contracts, though not yet closed home sales. The rubric was created in 2001 and the level of 100 is based on the contract activity in that year.
This report from the National Association of Realtors shows that 2018 is off to a good start with some increased momentum. A combination of increasing wages and more jobs means that more and more buyers are ready to buy homes. Sadly, though, many buyers are having trouble finding the homes they want to buy due to record low supply levels.
The National Association of Realtors said that last year home prices increased by 5.8%. That’s the sixth year in a row that home prices have increased at such a rapid rate, more than 5% in a year. This is due, in part, to a small inventory that causes prices to rise at a quicker pace. It is possible that new tax laws, which take away the previous financial motivation to buy, will affect the rate at which homes are selling, causing sales to slow.
With households earning more income this year, they’ll be more able to set aside money for down payments. A demand will continue to increase this year in most of the market, although some higher priced markets, who will feel the pinch from the new laws, will probably see changes trending downward.
Increasing mortgage rates could also affect the rate of sales. Rates are at their highest in four years. These rates are expected to continue on an upward trajectory. Experts recommend locking in lower rates now, before the rates rise further.
The increasing mortgage rates and changing tax laws will most likely continue to affect the sales of homes. But buyers are still searching, despite low numbers of available homes. These numbers reported by the NAR show that the housing market is looking positive coming into the new year with a pinch of cautious optimism due to mortgage and tax changes on the horizon.
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