|The 2016 Housing Market Is Off to a Good Start
Photo: © Corbis Photography - Veer
Consumer confidence is almost as high as it was pre-recession. Economists predict GDP growth will see a slight year-over-year increase. And private sector job growth has been steady for the past two years, averaging 240,000 jobs per month. All of these factors led the National Association of Home Builders' chief economist David Crowe to declare 2016 "a good year for housing and the economy."
Mortgage Rates to Rise from Cheap to Low
This year mortgage rates are expected to climb one-quarter to one-half of a percentage point to an average of 4.5 percent. Though the days of "cheap" 4 percent mortgage rates may be over, rates in 2016 should still be "low," according to Frank Nothaft, chief economist of CoreLogic. Buyers might be faced with slightly higher mortgage rates, but they may find it easier to qualify for their mortgages. Economists expect tight mortgage credit standards to slowly loosen in 2016—but not quite to levels seen 15 to 20 years ago.
National Sales Climb
According to the National Association of Realtors®, national existing-home sales saw a significant climb in December, due in part to the Know Before You Owe initiative. These new mortgage rules, which came into effect October 3rd, delayed some transactions from November to December as lenders adjusted to the new consumer mortgage form. But while the delays accounted for some of December's activity, they were not the only influencing factor; warm weather and the prospect of higher mortgage rates also contributed to the sales jump. Existing-home sales climbed 14.7 percent in December, which is 7.7 percent higher than a year ago. Sales haven't been this high since 2006; however, sales will have to climb much higher to beat 2006's record of 6.48 million.
Regional Home Sales
Northeast - Existing-home sales' annual rate: 750,000, a rise of 8.7 percent. Sales are 11.9 percent above a year ago. Median price: $255,700, which is 5.3 percent higher than December 2014.
Midwest - Existing-home sales' annual rate: 1.22 million, a 10.9 percent increase. Sales have risen 9.9 percent above December 2014. Median price: $171,000, a 7.5 percent climb from a year ago.
South - Existing-home sales' annual rate: 2.27 million, up 14.6 percent. December sales are 4.6 percent higher than a year ago. Median price: $196,100, which is 6.8 percent above December 2014.
West - Existing-home sales' annual rate: 1.22 million, a climb of 23.2 percent. Sales are up 8.9 percent from a year ago. Median price: $321,100, an 8.2 percent increase from December 2014.