March 16th, 2015
With temperatures warming up across the country, the spring homebuying season is here, and analysts are excited about what’s to come. Various housing market stakeholders predict several conditions will push more Americans to transition from renting to owning, bolstering the sector throughout 2015.
Sales to rise with temperatures
Home sales typically rise in spring, but the highlight of this year’s gains will be increasing rent prices, according to Freddie Mac. The government-sponsored enterprise predicted rents will continue a trend of growth from 2014, when they rose an average of 3.6 percent. As consumers search for more affordable housing, they will turn to homeownership.
“This month kicks off the spring homebuying season,” said Freddie Mac Deputy Chief Economist Len Kiefer. “Between now and the end of June, we’ll see about 40 percent of all home sales for the year.”
In addition to sales, Freddie Mac forecasted residential construction will pick up, bringing both metrics to prerecession levels. The rise in housing starts will present more inventory to meet homebuyer demand, giving sales extra room to grow.
Builders also optimistic about spring
With the projected rise in new home construction, homebuilders also have grand expectations for the 2015 housing market following the spring homebuying season. A survey of 213 local builders from John Burns Real Estate Consulting revealed new-home sales climbed 12 percent year over year in February, and analysts expect this pace to hold through 2015. The Northeast and California saw the largest new-home sales growth.
“I think we’re right on pace to have a 10 percent to 15 percent better year than we did last year in overall sales volume,” explained Burns in an interview, according to The Wall Street Journal.
Keeping an eye on oil-dependent markets
While the outlook for the overall housing market is positive, some metro areas are coming up short on positive sentiment. Houston’s real estate sector, for example, is starting to feel the effects of steep declines in oil prices, as the city is the largest oil production hub in the U.S., Bloomberg reported.
Examining data from the Houston Association of Realtors and insights from local experts, the media outlet deduced a recent drop in new-home sales in the area stemmed from the market finally feeling the effects of its struggling oil sector. As the city’s primary economic stimulus becomes constrained, homebuying has paused, one real estate agent told Bloomberg. One upside is buyers gain leverage due to the slow pace of sales and may be able to negotiate better sale prices.