Existing single-family home sales rise again in the U.S. this past April to reach a 3-month high, giving yet another indication that the economy is starting to pick up after a slow start to 2016, reports the Financial Times.
According to the National Association of Realtors (NAR), existing home sales rose to a new annualized rate of 5.45m units last month, up from 5.36m units in March. This jump comes despite economist predictions that April’s rate would hover at around 5.4m units.
“April’s sales increase signals slowly building momentum for the housing market this spring,” reported the NAR.
Spring is known to be a major home-buying season in the United States, but some experts expressed concerns that home sales could be slower than usual in 2016, in part due to an exceptionally warm winter in many parts of the country. Of course, mortgage rates that are hovering around a 3-year low have also helped home sales rise again in the U.S. Still, there is a concern that buyers could be unable to find affordable homes if wages don’t start to rise and the growing price of real estate doesn’t slow down.
“More broadly, the report is the latest piece of evidence to suggest the US economy is once again heating up after growth slowed sharply in the first three months of this year,” wrote the Financial Times.
Still, the news that home sales are on the rise again has bolstered confidence among Federal Reserve policymakers, who are adjusting to the idea that slight weakness in the U.S. economy during the first quarter of 2016 is looking more like a one-time slip up and not an indication of a larger trend
According to Economic Calendar, as home sales rise again the overall housing sector is remaining firm and serves as a vote of confidence in the overall U.S. economy. The April rise represents an increase of around 1.7 percent, while the Midwest saw sales rise more than 12 percent higher that the same period in 2015, boosted by low mortgage rates and more affordable housing.
“Median prices rose 6.3 percent in the year to April with the unbroken run of year-on-year gains extending to over four years,” wrote Economic Calendar. “Firm demand was [also] illustrated by a decline in average selling times.”
On a national level, 30-year mortgage rates were at the lowest level they’ve reached since May 2013, hitting 3.61 percent. The general consensus is that the housing market as a whole appears to be in stable condition poised for continued growth. However, a sudden increase in bond yields and mortgage rates has the potential to cause a dramatic downturn in the housing sector, especially since median incomes have risen so slowly.
According to Bloomberg, inventory of available properties also dropped 3.6 percent since April 2015 to just 2.14 million units during the same time this year. The increase may indicate that the U.S. housing industry is returning to a more stable path of growth with home sales on the rise, bolstered by solid hiring and low borrowing costs. Still, first-time buyers have been slow to enter the U.S. real estate market, which puts a damper on the sector’s contribution to the nation’s overall economic growth.
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