Atlanta Residential Real Estate Springing Forward
After a month of stagnation, the Cal-Culator, Atlanta’s residential real estate index, rose slightly in March by 0.1 to bring the index to 6.4. Incredible home price growth along with an increase in home sales and an uptick in consumer optimism fueled the March index’s rise, though the inventory crunch is still negatively affecting the housing market.
Pending Home Sales
The Pending Homes Sales Index, a forward-looking indicator, rose 3.1 percent month-over-month and a staggering 12 percent year-over-year, according to the National Association of Realtors. Pending home sales are now at their highest level since June 2012 and have increased year-over-year for six months.
“Pending sales showed solid gains last month, driven by a steadily improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents,” said Lawrence Yun, NAR chief economist.
According to the latest data released by S&P/Case-Shiller Home Price Indices, home prices across the nation have been on the rise in the past year, with Atlanta posting stronger price growth than both the 20-city and 10-city indices. Home prices climbed 4.9 percent in metro Atlanta from the previous year, but cooled down 0.2 percent from the previous month.
“The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continue to support further increases in home prices,” said David M. Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices.
Zillow recently found that homeowners are more confident in the housing market than renters and consumer optimism has risen 3.7 percent year-over-year among homeowners. The Zillow Housing Confidence Index also found an increase in the number of all Atlanta renters who say they expect to buy a home in the next 12 months. There was also an increase in young-adult renters, a vital demographic needed to spur housing recovery, in Atlanta who said they are expecting to buy a home within the year. The largest year-over-year increases for young adult renters looking to buy a home were in Phoenix, San Francisco and Atlanta.
The nation’s housing market still has to overcome some large hurdles to even begin to come close to approaching pre-2008 housing numbers. Two of the largest inhibiting factors that have been consistently negatively affecting the industry are the decrease in first-time homebuyers and low inventory levels. However, the share of first-time homebuyers rose for the first time in February since November 2014, according to the NAR’s REALTORS confidence index. Had more inventory been available, experts believe that first-time homebuyers would be more likely to move on properties.
“Several markets remain highly competitive due to supply pressures, and Realtors are reporting severe shortages of move-in ready and available properties in lower price ranges,” adds Yun. “The return of first-time buyers this year will depend on how quickly inventory shows up in the market.”
The April Cal-Culator will be released April 12 and will hopefully reflect continued home price and sales growth, in addition to increases in inventory levels and the share of first-time homebuyers.