The Low Post News

Rise in U.S. Housing Sales after Q1

Rise in U.S. Housing Sales after Q1After a strong few years, existing and new homes in the U.S. relatively declined this year. During the first three months of the year, sale of existing homes (which make up about 90% of overall house sales) suffered.

Home sales are linked with financial factors such as mortgage rates, home prices and consumer affordability. Weak economic conditions in the first quarter this year resulted in a negative 2.9% GDP growth, including a 4.2% decline in real residential fixed investment.

House Sales Gain Momentum in the U.S.

Hurt by the slowdown in economic activity, sales of existing homes declined from a seasonally adjusted annual rate of 4.87 million in December to 4.62 million in January. By March, the decline had reached 4.59 million and represented a year-over-year decline of 7.5%. New home sales also remained low – reaching a SAAR of 384,000 in March.

However, housing sales have picked up in the U.S. after the first quarter. Existing home sales improved in April and May when the SAAR reached 4.89 million. It was the highest sales figure since October of last year.

As for new homes, sales rose to a SAAR of 504,000 in May. The sales rose 17% year-over-year and reached the highest sales figure in the last twelve months. Following the downfall in the first quarter, the housing market seems to be gaining momentum, backed by declining lending rates and the improving consumer affordability.

According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage declined to 4.12% in the first week of July from 4.53% in early January. Potential home buyers are interested in taking advantage of the lowered costs, ultimately boosting home sales.

Home sales are also impacted by job creation and U.S. family incomes. The U.S. unemployment rate fell to 6.1% in June, the lowest it has been since September 2008. This is an advantage for the housing industry as income growth supports home sales.

With the U.S. economy expected to rise later in the year, the favorable business environment and shrinking unemployment rates could boost new and existing home sales. For those ready to sell, now is the time to up those home improvement projects.

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