By: Crissinda Ponder
Activity in the housing market has been heating up just in time for the summer season.
The number of single-family home sales is rising and more first-time homebuyers are making their way into the market, according to data from the National Association of Realtors, or NAR.
“We’re seeing more activity in general and we think that’s a function of the improving job market,” says Lynn Fisher, vice president of research and economics for the Mortgage Bankers Association.
Unfortunately, builders can’t keep up with the demand.
“The major problem facing housing now is the shortage of inventory,” says Lynn Reaser, chief economist at Point Loma Nazarene University in San Diego.
Read on for five other housing trends to watch in the next few months.
The Federal Reserve is expected to begin gradually raising the near-zero federal funds rate this year. That move will affect mortgage rates.
“I think they’ll incline slightly toward the end of the year,” says David Crowe, chief economist and senior vice president for the National Association of Home Builders. He predicts an increase of about 10 basis points, or one-tenth of a percentage point.
In the first half of 2015, the 30-year fixed-rate mortgage averaged 3.92%, according to Bankrate’s weekly survey of interest rates. Fisher thinks the 30-year fixed-rate mortgage will reach 4.5% by year’s end.
“They’re going to be a little bit volatile, so there are going to be up-and-down movements as we go,” she says.
This rise in rates will prompt potential buyers to take action, Reaser says.
“For the near term, this prospect of higher interest rates down the road may spur some pickup in homebuying, as individuals who have been sitting on the fence finally jump into the market,” she says.