The confidence level for April marks the third consecutive month that a majority of respondents believe the housing market is strong.
Chicago, IL (PRWEB) June 13, 2015
The National Association of Realtors released its confidence index report on May 21st. The index report revealed that most real estate professionals feel optimistic about the next six months of housing market activity, and The Federal Savings Bank, a Midwest based lender, also feels the same.
The confidence index serves as a key indicator of how the housing market is performing as well as measures future growth. The confidence level for April marks the third consecutive month that a majority of respondents believe the housing market is strong.
Market conditions reflect strength in confidence
Most local markets saw improvement due to low interest rates and notable job growth. In fact, the U.S. added 3.5 million new jobs on a year-over-year basis. These factors increased confidence for growth in all types of property.
The index for townhomes in the U.S. increased to 53 from 48 in March. Confidence improved on a year-over-year basis from 46. Single-family home confidence jumped to 71 from 68 in March and 64 a year ago, and condominium confidence improved to 48 from 44 in March and 42 year over year.
Buyer traffic is strong
The report indicated that the majority of real estate agents felt buyer traffic in their local markets was strong. The Federal Savings Bank is also experiencing a higher number o f home loan applications versus a year ago. Lower Federal Housing Administration mortgage insurance premiums, 3 percent down payment options and more first-time home buyers entering the market have contributed to the positive outlook. The report noted that first-time home buyers accounted for 30 percent of all sales in April. This is unchanged from March but higher than April 2014. The easing of homebuying standards for qualified borrowers will continue to help more young buyers enter the market.
Available inventory remains low. However, the weakness in seller traffic is improving. The index registered at 48, which is up from 43 in March and 44 from April the previous year.
Prices will increase
The report indicated respondents anticipate prices to rise a bit faster than expected a month ago over the course of the next year. Higher demand and low inventory likely contribute to increasing home prices.
While many participants feel things are heading in the right direction, there are some key issues that may impact the continual success of the housing market. In some instances, professionals within the real estate industry can make sure these issues do not affect the confidence in the market by raising awareness. The Federal Savings Bank thinks one area of concern outlined in the index was the adaption of the TRILA-RESPA Integrated Disclosure rule.
The new rule has the potential to impact the timeliness of closings. With new requirements and rules issued by the Consumer Financial Protection Bureau, consumers and those working in the real estate sector must become fully aware of how the changes will affect them and the loan application and homebuying process. The implementation of this rule may even help improve consumer confidence when applying for a mortgage. The intention of TRID is to help simplify the loan process and help consumers fully understand what they are agreeing to.
Becoming aware and communicating regularly will help ensure this change does not negatively impact the real estate market.
Contact the Federal Savings Bank, a veteran owned bank, to learn more about mortgages.