With low supply levels and sustained price growth, February saw a whopping 7.1% decrease in existing home sales. Despite the drop, home sales in January and February were better than one year ago, and sales are expected to rebound by around 5% in March.
Why the Decrease in Sales?
The dominant economic trend thus far in 2016 has been volatility, and it has affected the housing market. Despite external factors like global economic volatility and crashing oil prices, the housing market remains solid. The labor market is firm and low oil prices have given a boost to consumer confidence.
Confidence for 2016
Freddie Mac predicts that 2016 will be the best year in a decade for the housing market. They predict housing sales, home prices, and new housing starts to surpass peak 2006 levels. At 3.59 percent, the average long-term US mortgage rate fell to its lowest level in over a year on April 7th. More than anything, mortgage rates have been kept low by the Fed’s decision to slowly introduce rate hikes throughout 2016.
2016 Forecast: the Numbers
Freddie Mac cites three key factors in their prediction: robust job growth, low mortgage rates, and gradual increases in the housing supply. They forecast new single-family home starts will increase by 200,000 units in 2016 for a total of 1.3 million. They expect the rapid increase in home prices to slow somewhat over the next year—4.8% for 2016 compared to 6% in 2015. Mortgage originations are expected to increase by $70 billion this year, driven by higher housing prices.
Title Insurance and Closing Services from Lakeside Title
Lakeside Title Company is a title insurance company that works with builders, lenders, and realtors in Maryland, Washington D.C., Northern Virginia, and Southern Pennsylvania. We offer a full range of closing services and title searches. For more information, please visit our homepage.
If you have a question for an attorney, please contact Lakeside Title Company’s affiliated Law Firm, Deardorff, Rath & Pichon, LLC.