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Housing market expected to bloom in the spring
  • Mar 23, 2015
  • New Home Ambassador
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Experts anticipate that the housing market will blossom this spring.

 

Experts anticipate that the housing market will blossom this spring. Between strong job growth and Freddie Mac's March 2015 U.S. Economic and Housing Outlook, real estate might hit a home run during the upcoming warmer months.

Freddie Mac anticipates 2015 to be a robust year for home sales. The government-backed enterprise believes the housing market will strengthen significantly this year. A large portion of yearly home sales occur during the warm months and this spring is expected to be particularly successful. 

"This month kicks off the spring home buying season," said Len Kiefer, Freddie Mac's deputy chief economist. "Between now and the end of June, we'll see about 40 percent of all home sales for the year."

The success of the housing market is largely dependent on the volume of real estate activity that occurs between March and August. Kiefer also noted that this season can serve as an indicator of how the market will fare for the rest of the year.

"Overall, we're feeling good about housing, and we expect this year to be the best year for home sales and new home construction since 2007 when we saw total home sales about 5.8 million for the year," stated Kiefer.

A variety of factors will likely contribute to a stronger season for real estate. Homeownership might become more appealing due to increasingly expensive rental rates, improved accessibility to home loans and continual impressive job growth. 

Rising lease prices will likely turn renters into buyers. Experts believe that the increasing cost of rental units will drive more individuals to apply for conventional home mortgages in lieu of signing another lease. Without a clear answer for when the rates of rent will plateau, more people might find homeownership to be an affordable option more conducive to their current financial situations than continuing to pay rental fees.

In conjunction with more lenient lending standards for qualified prospective homeowners and low down payment options, more people may decide to purchase residential real estate in 2015. Additionally, an improving economic situation may contribute to individuals becoming more comfortable with investing in a new home. 

Strong job growth continues into 2015. While mortgage rates remain historically low, they have risen alongside an improving employment situation. Freddie Mac's Primary Mortgage Market Survey indicated that the average interest rate on a 30-year fixed mortgage is continuing to climb in conjunction with steadier job growth.

According to the Bureau of Labor Statistics, nonfarm payroll jumped 295,000 positions in February. In addition, the national percentage of individuals who were unemployed fell to 5.5%. In fact, the number of unemployed people has decreased 1.2 percentage points over the course of a year.

Industries that saw the most substantial growth included:

  • Food services
  • Drinking services
  • Business services
  • Professional services
  • Transportation
  • Construction
  • Health care
  • Warehousing

The food and beverage services industry saw the most substantial increase, with a total of 59,000 jobs added during February.

Also, construction employment added 29,000 jobs, and specialty trade contractor positions increased by 27,000. This may be largely due to the anticipation of more first-time homebuyers entering the housing market in upcoming years.

 

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