Sales and price gains have slowed in the U.S. housing market, but experts are still convinced that the recovery is still in its early stages and that there is much more room to grow before things cool off. A stronger economy and better jobs growth has helped fuel price and sales appreciation even as rising mortgage interest rates and slower construction create turbulence in the upward trajectory. Meanwhile, the Financial Times reports that the rental market also continues to grow as people who were harmed by the housing crisis seek more affordable accommodations. For more on this continue reading the following article from Global Property Guide.
U.S. home prices will remain positive until year-end as demand gets a boost from moderate job growth and record-low affordability rates.
In the end of second quarter, the United States is on top of international real estate trends with inflation adjusted home prices rising 8% year-on-year, according to Scotiabank global economist Adrienne Warren said in a note, “Global Real Estate Trends.”
The economic and monetary conditions in the U.S. led by rising consumer confidence will contribute to considerable pent-up demand for housing following the multi-year downturn, Ms Warren said.
Although rising mortgage rates will ease, this will not impede the recovery, which Ms Warren said “is still in its early stages from a cyclical standpoint.”
However, in spite the positive projection on the U.S. housing market, the construction activity is still low.
Fewer Homes on Sale
Trulia’s lead economist Jed Kolko in a blog noted that though inventory levels point upwards, vacancies are still high because a few homes are listed on sale.
Homeowners are waiting for prices to lift further, Mr. Kolko added before putting them in the market.
He said that a pent-up demand of at least 1.1 million annually could be tapped from households to be formed once the generation X and Y gets a bigger push to leave their parent’s nests and be on their own.
Rentals More Appealing
Majority of U.S. home owners, whose property are still under water, are now renting, a related report by the Financial Times said.
U.S. homeownership rate declined to 18-year low at about 65% and is still to decline to 60% from a high of 70%, economists surveyed by Ft.com said.
The U.S. commerce department has estimated that for each percentage point decline in home ownership, there has been a shift of approximately 1.1 million households to the rental market.
“The construction of multifamily apartments had rised by 353% since the housing market dip, while single-family homes rose 78%,” the FT.com said quoting data from the U.S. commerce department.
This article was republished with permission from Global Property Guide.