2016 continues to be an impressive real estate market with home prices continuing to rise, homes selling fast, and first time buyers entering the market in impressive numbers. This quarter shows that home buyers are on the move with an increase of 9% of our markets surveyed showed increased buyer activity over the previous quarter. Coupled with a tight supply of homes on the market and extraordinarily low interest rates home prices continue to go up.
This data comes from a survey of HouseHunt real estate agents with exclusive territories across America. This grassroots approach to studying the housing market gives us a thorough look at where the real estate market is at the end of the second quarter 2016.
Buyer and Seller Activity
Last quarter we presented a seller’s market trending toward a more balanced ratio of buyers and sellers and a trend towards a more balanced market. This quarter however, we have an impressive increase in buyer activity with 84% of all markets surveyed showing an increase in buyer activity. Additionally, in the second quarter we found an 18% increase in seller activity with 58% of the markets showing an increase in seller activity.
Even with the increased seller activity unsold housing inventory is still very tight with two-thirds of the markets surveyed reported a very tight supply of homes. The increased buyer activity is snapping up homes that are priced well with 78% of the markets showing that homes are receiving over 95% of their asking price and 90% of the markets regularly see multiple offers on their listings.
This quarter we also have seen a substantial increase of 4% in first time buyers purchasing homes. Fueled by extraordinary low interest rates and more homes for sale, this is an incredible time for first time buyers to enter into a real estate purchase. In the beginning of 2015, first time home buyers were at a near all time low and home purchases were being fueled by investors primarily and repeat buyers which made up 82% of the purchases.
A strong seller’s market is an indication of a strong real estate market and strong economy. This year 93% of the markets surveyed showed an increase in housing appreciation compared to 91% last year at this time. Our surveys are showing a very tight inventory supply in 66% of our markets and the National Association of Realtors has just released their June statistics showing a 4.6 month supply of inventory. A six month supply of inventory is generally considered a balanced market so tight supply and low mortgage rates are keeping this market a seller’s market.
Besides tight inventories and increased appreciation in sales prices which is up 4.8% from June 2015 according to the most recent statistics from the National Association of Realtors we need to look at other indicators to determine the state of the market. Only 2% of the markets are reporting selling their homes less than last year with, conversely, 98% of all markets showing appreciation increases. One interesting survey point was that only 53% of the homes were being sold in less than 60 days compared to 67% last quarter and 70% last year at this time. This indicates that price increases may be stalling as the market catches its breath. The stall may be short lived if increased seller activity accelerates and interest rates continue to stay at the incredible low rates of today with the average fixed rate on a 30 year mortgage running at around 3.6%.
Home foreclosures continue to remain at a normal level with 93% of our Agents stated that foreclosures made up less than 15% of the inventory. This is consistent with Realty Trac’s report that foreclosure activity at the end of 2015 is at a nine year low saying that the US has returned to a healthy foreclosure market with any activity fueled only by local economic factors.
The return to the market of first time home buyers, steady single digit gains in home prices, increased seller and buyer activity point to a continued healthy real estate market for the rest of 2016. The annual rate of existing home sales is expected at 5.51 million homes compared to 5.41 million homes in 2015 according to the National Association of Realtors with a home price increase of 4.8% with 52 consecutive months of year over year gains. Strong and steady growth!
HouseHunt: Housing Market Conditions Report Report | Q2 2016 by HouseHunt