Home sellers and real estate professionals can break out some of that leftover bubbly from New Year’s Eve and clink a glass or two to a stellar opening for the 2014 housing market.
According to the Mortgage Bankers Association, sales of new single-family homes skyrocketed by 35% from December to January. That amounts to an annual adjusted rate of 543,000 new homes sold, despite a sputtering economy and sinking consumer confidence.
There’s also a sentiment among economists that there was ample upside room for improvement for home sales after a weak ending to 2013.
"While the big jump may appear to conflict with other data, such as MBA’s purchase application index and NAR’s existing-home sales data that point to a weak market for existing homes, our Builder Application Survey estimate is consistent with reports of homebuilder sentiment that show strength in the market for new homes," says Mike Fratantoni, chief economist at the MBA. "It is also worth noting that the significant January increase also followed a particularly slow pace of sales in November and December."
The MBA survey monitors home-buying activity by canvassing builders and mortgage service companies those builders work with to put buyers into new homes.
The survey data show that new home mortgage applications were up 27% on a month-to-month basis, with conventional loans making up 69% of new home loans recorded for the month. The use of higher conventional loans is considered a sign of stability for housing, as buyers are being approved more frequently and lenders seem to be casting a wider credit net to attract business.
There is a moderately downbeat note. The MBA reports that home mortgage loan sizes are shrinking. The average loan size in January fell to $289,358 from $300,444 in December.
That could be an one-time occurrence, though, as the MBA news comes in a week home prices are rising.
Seattle-based Redfin reports that home prices rose 14% in January (the same figure as a year earlier), providing more support for the argument that the U.S. housing market is gathering serious momentum.
That all adds up to a great start to the residential real estate market in 2014 and provides a healthy dose of optimism heading into the spring buying season.
This article was republished with permission from The Street.