As mortgage rates continue its march up, many prospective homebuyers are realizing their intentions and purchasing their homes. This creates a demand in a current market where available housing is low. So if you are planning to buy now, expect competition.
In a recent report released by the National Association of Realtors®, pending home sales dropped to its lowest in a year. Measured via the Pending Home Sales Index, it tells the health of property sales in the market. The new report may seem contradictory to our assumption. After all, low sales may indicate less interest. But let us not forget that there are various drivers to demand.
The dynamics of demand
One major influence that could’ve resulted to the new low is the wage itself, which haven’t yet caught up to the increases in both rates and home prices. The more prices go up, the lesser the properties would be affordable for the average homebuyer. That pushes many to delay their home buying intent and instead choose to rent for more years until the market becomes favorable again for a purchase.
Still, that does not erase competition. There are still thousands of Americans who are eager to fulfill their American dreams. Demand runs high and with the continued slack in housing inventory, expect to arrive at a property with multiple interest.
PHSI’s monthly index covers the previous year nationally and four regions. The data include both seasonally adjusted and non-seasonally adjusted figures.
In the Northeast region, PHSI rose 2.3 percent to 98.7 in January 2017, a 3.6 percent high from a year ago. In the Midwest, it fell by 5.0 percent to 99.5, 3.8 percent lower than January 2016. Meanwhile, the index inched higher by 0.4 percent to 122.5 this year, a 2.0 percent increase from last year’s. In the West, this year charted a 9.8 percent decline to 94.6, a decrease of 0.4 percent from the previous year.
The Pending Home Sales Index (PHSI), published by the National Association of REALTORS® measures properties that are pending or under contract but are not yet closed.
The sale of a home is considered on “pending” status once it is tied under a contract between a buyer and a seller. Unlike most housing market metrics, the PHSI is a forecast measure, projecting future home sales. According to NAR, 80 percent of pending homes close within two months of contract.
If moving into a new abode is within your future plans, start your search as soon as possible so you can take advantage of lower rates before the new highs kick in. It would also give you more time to find the right property, and find the best lenders to work with.
To help you out, start here to find the best people in the industry. We can help you get connected with lenders in your area. Remember, getting pre-approved can help you sweeten your deal when making your offer. Let us assist you in getting there.