The year started off slow for the housing market as well as the overall economy with existing home sales down 7% and new homes sales down 3%. In the first quarter of the year we saw our economy decline by 2.9%. Bad weather was to blame for a significant part of the decline but economists anticipate the second quarter will rebound with significant growth. If you are in the market for a new home here are three trends to watch for in the second half of 2014.
The labor market is improving slowly but surely this year with five consecutive months of job gains over 200K. Improving employment is essential for our economy and also for the housing market as it allows more people to become homeowners, as well as gives more people the opportunity to sell their homes to add to the housing inventory.
Last year home prices surged but are now starting to moderate to a more normal pace, helping boost affordability for potential homebuyers. An increase in home inventory is helping keep home prices steady. Inventory of homes listed for sale has been an issue in the housing market, but in May the stock of homes for sale grew to the highest level in over a year.
Mortgage rates were on the rise at the end of 2013 but have come down and have remained fairly steady throughout the year. As the economy picks up in the second half of the year mortgage rates are likely to rise. The Federal Reserve has been keeping mortgage rates low with their stimulus program but are gradually eliminating this month by month. Mortgage rates were expected to rise as the Fed tapers their spending yet it has had an adverse reaction so far.