Recent data released by the National Association of REALTORS® (NAR) through the second quarter Housing Opportunities and Market Experience (HOME) Survey indicates that 75 percent of Americans feel it is currently a good time to sell a home, while 68 percent of Americans believe that it is currently a good time to purchase a home. The report also shows that a large number of consumers believe that home sale prices will continue to rise in many metro areas across the nation and that home ownership makes communities stronger.
NAR Chief Economist Lawrence Yun says, “Inventory remains the driving force in real estate, affecting everything from rising prices to household formation. Improving supply conditions is critical to improving buyer optimism and helping to remove some of the barriers holding back potential first-time buyers.”
Home prices have continued to climb in many but not all metro areas across the United States, giving sellers confidence to list their homes for sale at this time. Approximately 46 percent of the HOME survey respondents strongly agree that it is a great time to sell. This is an increase of 4 percent from the last quarter results. Yun indicated that this seller optimism is anticipated to help increase inventory levels.
The nation’s housing inventory increased by 12.2 percent in the second quarter, representing the largest increase since the beginning of 2015. According to data released by Trulia, a real estate research firm, thirty of the United State’s largest metro areas saw their annual housing inventory increase during the second quarter of this year. This is a dramatic shift in a positive direction in comparison to just 13 metro areas with annual housing inventory increases in the beginning part of the year.
Trulia data analyst, Alexandra Lee, credited an increase in new home construction for the increase in inventory as well as an increased number of homeowners willing to list their homes for sale. Some homeowners say they want to benefit from larger price gains and a number of baby boomers may also be ready to list their homes after living in them for many years and preparing to retire.
Another sign of increases in housing inventory across the U.S. has been seen in the decreasing of rental rates in some of the nation’s major cities. Recent data shows that the U.S. apartment market had its worst spring season since 2010 with new supply and weakening demand resulting in a greater number of vacancies and minimal or no rent increases in some cities.
According to RealPage Inc. rental rates rose by 2.3 percent in the second quarter of this year, representing the smallest increase since the third quarter of 2010. In addition to little or no increases in rental rates, some landlords are offering other incentives, such as free parking, gift cards, and three months without a rental fee. Industry analysts say the cause of the slowdown with rental fees is mainly an increase in supply. Homebuilders responded to increasing rents by constructing the highest number of new apartments in 30 years.
A greater number of millennials opting to become homeowners is another attributing factor. The United States added 1.3 million owner households in the first quarter of this year over the same period of time in 2017 and there is a reported decrease of 286,000 in renter households, according to recently released United States Census data.
Despite the drop in rental rate increases, rental growth continues, just at a historically slower rate. There is little to no concern that the slowing down of rental rate increases could have any large economic effect on the U.S. financial system. As a matter of fact, the economy and housing industry as a whole remain strong and there are signs of continued growth and strength in some metro areas, such as those in Southwest Florida.
Southwest Florida housing entered the typically slower summer months with increases in inventory and home sales. Broker analysts noted that the Naples area in Southwest Florida has not seen inventory levels as high as those the area is currently experiencing since 2013.
The notion is that a growing number of homeowners who have been contemplating listing their homes will be motivated to sell and builders will continue to increase new home construction, so that inventory levels will continue to increase and the housing market will continue on a strong and healthy path.