Pending home sales jump, is the market rebounding?
The National Association of Realtors released monthly data for January 2023 and saw that signed contracts to buy existing homes in the U.S. jumped significantly. The pending home sales index climbed 8.1% comparing monthly data. That’s the biggest single-month increase since June 2020.
“Buyers responded to better affordability from falling mortgage rates in December and January,” NAR chief economist Lawrence Yun said in a statement.
Contract signings increased throughout the country. Pending sales were up 6.0% in the Northeast, 7.9% in the Midwest, 8.3% in the South, and 10.1% in the West. When asked about the nationwide increase, Yun stated, “An extra bump occurred in the West region because of lower home prices, while gains in the South were due to stronger job growth in that region.
What’s the current prediction for home remodeling?
While home improvement has seen a slowdown in the past year, industry experts expect that it will see a historic boom in the next few years.
A home enters its prime remodeling years at about 20-to-40 years old. A lot of homes are coming into that range and will see a need for improvements and replacements in the next few years.
Eric Finnigan, VP of research & demographics at John Burns Real Estate Consulting, stated, “[These homes are] basically going to go through a complete sort of facelift. We’re seeing a big wave of homes entering that cohort, [those] sort of prime remodeling years.”
It also helps that almost 75% of homeowners have mortgages that are under 4%. With rates a bit higher now, industry experts predict that homeowners will prefer to stay in their current homes and remodel rather than upgrading to a new house and a new mortgage.
Is the rental market about to fall?
According to the Wall Street Journal, renters are about to get a break in monthly housing costs. Apartment rents fell in every major metropolitan area in the country in the last six months, and more discounts could be on their way.
Most major metros have multiple housing projects underway and should start to see the amount of properties available to rent increase. More available properties on the market typically means that landlords have to lower monthly rent to make them more attractive to potential tenants. In fact, the upcoming delivery schedule of new properties is the biggest since 1986.
This could contribute to a market cool-off if properties start to sit on the market. It could even lead to more properties coming up for sale if renters are unable to find tenants.
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