Healthy demand and 4 percent month-over-month growth in supply are pushing housing markets to their best position since 2006, maintaining their springtime momentum and increasing sales in June 2015, according to Realtor.com’s ‘Advance Read on June Trends’ released today.
“Factors lending themselves to the market’s upswing are the psychological effect of recently increased mortgage rates as well as the specter of the Fed raising interest rates later this year,” said Jonathan Smoke, Realtor.com’s chief economist. “Although demand has been strong all year, in June we’re finally beginning to see an uptick in supply as sellers become more confident about home prices.”
The trend report also noted that a huge increase was seen in the amount of first-time homebuyers, many of which are millennials. According to a recent survey of site visitors recorded in June by realtor.com, 65 percent of older millennials (ages 25-34) say they intend to purchase a home within three months. This was an increase of 12 percent compared to just six months ago.
Realtor.com also listed markets that receive double or triple the amount of views per listing on the site compared to national average. The company also saw inventory move 25-40 days more quickly than the rest of the U.S. Realtor.com’s “Hotness Index” ranks the top 20 housing markets according to these two metrics, highlighting that they are the hottest markets for buyers and sellers.
According to the index, California made up nearly half of the country’s 20 hottest real estate markets due to its tight supply and economic-driven growth in demand. San Francisco was first overall in June, beating out Denver’s first place position in May. Texas is represented four times, with Dallas-Fort Worth at 5, Midland at 17, Austin at 18, and San Antonio at 19.
“The strength of all these markets is a clear reflection of economic-powered gains, but the Texas and Colorado story is more of a continuing narrative indicative of the resilience and diversified nature of the states’ economies particularly evident with the reduced contributions from the oil industry, Realtor.com said.
Today, the National Association of Realtors’ (NAR) also released their Pending Home Sales Index, a forward-looking indicator based on contract signings, pending home sales continued to increase in May and are now at their highest level in over nine years.
“Today’s announcement regarding May’s Pending Home Sales—the highest level since April 2006—points to further increases in new and existing home sales in June,” Smoke said. “The data – corroborated by both our earlier May findings as well as our Advance Read on June Trends–all show both demand and supply improving, foretelling further gains this summer.”
According to the index, pending home sales increased by 0.9 percent to 112.6 in May from a downward revision of 111.6 in April and is now 10.4 percent above 101.9 in May 2014. The index has increased year-over-year for nine consecutive months and is at its highest level since 113.7 in April 2006.
NAR’s chief economist, Lawrence Yun noted that increased contract activity for the fifth consecutive month is proof that home sales are off to their best year since the downturn.
"The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring," said Yun. "It's very encouraging to now see a broad based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive." Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages," Yun concluded. "Without meaningful gains in new and existing supply, there's no question the goalpost will move further away for many renters wanting to become homeowners."
Click here to view Realtor.com's Advance Read on June Trends/Hotness Index.
Click here National Association of Realtors' Pending Home Sales Index.