US New home sales hit an unprecedented record last May. The Coronavirus epidemic brought the market to a standstill. However, the aftermath of low mortgage rates it created got many buyers rushing back into the housing market.
The sale of single-family houses rose by 16.6%, making the second-biggest number of sales recorded in a month since 1992. Also, the data from the government showed that May’s purchase made 676,000 annualized strides. Similarly, the economic survey organized by Bloomberg showed that the median forecast was 640,000.
Low-Interest Rates Makes Home Ownership More affordable
US Composite Housing Affordability Index:166.80 for Q1 2020
The US Composite Housing Affordability Index is presently at 166.80 level. This is a rise from the 162.90 level it was last quarter and the 154.80 affordability level last year. This makes the current level a 2.39% rise from last quarter and a 7.75% rise since last year.
COVID-19 pandemic and the associated social distancing rules kept the housing market at a standstill in March and April.
Homebuilders are starting to welcome buyers as the lockdown measures gradually ease. Home sellers of freshly built houses see more buyers due to insufficient supply of old houses. Many people who previously don’t have enough money to own a house are acquiring houses thanks to the current low-interest rates.
High Percentage Of Home Sales Boosts Economy
The increasing number of sales is an additional guarantee that the housing market is becoming a sign of recovery for the economy irrespective of the current unemployment levels. The present unemployment level is the highest since the beginning of the COVID-19 economic Depression.
The unanticipated Coronavirus recession has pushed the housing rates so low that a few buyers can presently afford new homes.
New Homes Sale set the highest records since 2018
The present level of the US Fixed Housing Affordability Index is 171.70. And this is a rise from the 162.10 level it was in May and rise from the 153.30 level it was the previous year. Overall, this makes a rise of 5.92% it was the previous month and a 12.00% rise from the last Year’s level.
Owing to the recent rise in sales, the annualized stride of fresh homes sell in May before construction was roughly 184,000, making the biggest jump since the last three months. The number of new houses available for sale was the smallest in the record since July 2018.
The number of sales in the South is the highest in the country rose 15.2% making the highest for the last 7 months. The sale in the West rose by 29%, making the highest since the last three months according to data from the government.
The current real estate market trend in the US presents new investment opportunities for homebuyers. The present trend is evidence that the housing market is set to be more balanced making housing more affordable to prospective home buyers.