Monday, March 7, 2016 / by RE/MAX Rising
2016 Is Off to a Good Start
Job creation—arguably the most important factor in housing demand—is moving apace. January saw 151,000 jobs created. That level of employment growth is below 2015’s monthly average, but unemployment is now near 10-year lows and is in line with the current macro forecast from the National Association of Realtors® (NAR). This level of employment growth should translate into the 3% growth in housing sales we are expecting for the year.
Speaking of sales, January’s existing home sales report did not disappoint. Even though sales are taking longer to close, due to the implementation of new disclosure and closing forms and procedures, the pace grew 0.4% in January from December. Granted, that’s not a lot, but analysts had been expecting a decline. And from January 2015 to January 2016, existing home sales grew a solidly impressive 11%.
In Bloomington/Normal we are seeing much the same thing, with January and February producing better than expected sales numbers. 331 homes were sold* in B/N in our first two months of 2016, up 7% from the same period last year. We are experiencing relatively low inventory levels, with 652 homes currently for sale in Bloomington/Normal*. This gives us a 3.5 month supply of homes, which is considered a Seller's market. We can expect home values to continue their slow, but steady, climb over the next few months. As Smoke states:
The increase in sales is resulting in continued tighter-than-tight supply—measured by NAR to be four months in January. For you non-economists out there, that metric measures the number of months it would take to sell the current inventory of available homes, at the current pace. Got it? Six to seven months’ worth of homes on the market is considered normal; four months is cray-cray.
This is driving prices higher and encouraging consumers who hope to buy this year to get started as soon as possible.
January’s new home sales and new home construction remained consistent with the pace of activity of the last several months. Still, the level of new construction still represents solid year-over-year growth, especially in single-family homes. The most encouraging sign: The median price of new homes is finally declining, as a result of the fact that builders are offering more affordable homes.
Finally, the most timely readings we can pass on come from our own observations at realtor.com that confirm that demand is growing rapidly at the start of the year, resulting in an acceleration in inventory movement that we typically do not see until March or April.
What does this mean for you? If you are considering selling your home this year, now is the time to talk to a professional REALTOR about what your home is worth. You can start that process by clicking here: What is My Home Worth?
*All statistics from the BNAR MLS as of 3/7/2016, "Sold" homes indicates homes that went pending during the time period stated, not closed. Click here for the full Realtor.com article.