As the real estate market continues to heat up across the country, buyers are flocking to the market despite rising prices. With low interest rates, a strong economy, and a shortage of available homes, buyers are finding themselves in a competitive market.
The National Association of Realtors (NAR) reports that existing home sales in the U.S. rose 6.5% in April from a year ago, the largest year-over-year gain since October 2017. This surge in sales is being driven by a combination of factors, including low mortgage rates, a strong job market, and a shortage of homes for sale.
The shortage of homes for sale is particularly acute in many of the nation’s largest cities. The NAR reports that the supply of existing homes for sale is at a record low, with just 1.9 months’ worth of inventory available. This means that for every 100 homes for sale, there are just 1.9 months’ worth of buyers. This has driven prices higher in many areas, with the median existing home price rising 6.6% in April from a year ago.
Despite the rising prices, buyers are still eager to enter the market. With mortgage rates still near historic lows, buyers are taking advantage of lower borrowing costs to purchase a home. Additionally, the strong economy and low unemployment rate are giving buyers the confidence to make a purchase.
The surge in buyers is also being driven by a number of demographic trends. Millennials are now entering their prime home-buying years, and many are taking advantage of the market conditions to purchase their first home. Additionally, the aging of the baby boomer generation has led to an increase in the number of empty-nesters looking to downsize.
The real estate market is likely to remain competitive in the months ahead. With mortgage rates still near historic lows and a shortage of homes for sale, buyers will continue to face stiff competition. However, with a strong economy and low unemployment, buyers should remain confident in their ability to purchase a home.
