There has been a lot of buzz lately about the rise in existing home sales and the rise in new home construction. This, coupled with the record-low interest rates, has made the market ideal for potential home sellers.
Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months’ worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006.
Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate.
As the buyer-seller playing field begins to level out, it’s important to understand SMART buying. Start with the basics and don’t get ahead of yourself.
- Get your credit score up.
- Save for at least a 20% down payment.
- Create a household budget.
There are many advantages to home ownership and just because there are more buyers out there doesn’t mean you can’t still get a great deal.