US Housing sector experiences bumpy road
The US housing market boosted at the end of the year 2015 that marked the best year for existing and fresh home sales since 2007. However, the growth of the overall housing market in the New Year is troubled by the view of greater interest rates, increasing real estate costs and underwhelming pay gains.
Nearly 501,000 fresh homes were sold previous year, an increase of 14.5% from 2014. This number is the largest annual figure that the local real estate sector has seen in 8 years, U.S.News said citing a report from the Census Bureau. This gain was partly due to the increase in December sales of 10.8% over the previous month and 10% rise from the previous year period.
In the Midwest monthly gains increased 31.6% from the previous month and the monthly gains in Northeast rose 20.8% from November.
This annual profit reflects a steady rise in demand from buyers and the rising confidence in builders, according to Ralph McLaughlin, the chief financial expert at Trulia.
The existing home transactions dominated the December overall home sales while the fresh home transaction represent just a fraction of the US overall housing sales. According to a report by the National Association of Realtors, existing home sales increased 14.7% from previous month and rose 7.7% from last year.
The average existing house price in December amounted to $224,100, an increase of 7.6% from $208,200 in the prior year period. Total housing inventory during the end of December fell 12.3% to 1.79 million existing houses available for sale, and is currently 3.8% lesser than previous year.
Meanwhile, a report by the Canadian Mortgage and Housing Corporation shows a modest problematic marks of overbuilding in housing market, CTV NEWS said. Overbuilding refers to the excess homes that have been constructed in a locality. The signs of overvaluation and overbuilding were prominent in areas like Regina, Saskatoon and Calgary. The CMHC quoted weak employment figures, drooping oil prices and migration as main reasons for the troubles in housing market.
Regions like Edmonton, Winnipeg, Ottawa, Quebec City and Montreal demonstrated modest trouble signs in housing market. While, Hamilton, Halifax, Moncton, Vancouver, St. John's and Victoria revealed the fewest marks of problem.
Reuters cited a report from the Mortgage Bankers Association which revealed that applications for home loans rose 8.8% previous week. Even after the Fed's interest rate hike, mortgage rate continue to be less by chronological standards. Tian Liu, chief financial expert at Genworth Mortgage Insurance, said that this is a promising mark for the housing sector as the world step into 2016.
According to reports, a robust housing market should lay a surface under the nation's economy, which has been injured by spending reductions by energy companies as well as strong dollar. Efforts to shape down swollen inventories have been a slog on development.