Real-estate agents and home builders have been declaring that this is the best time to buy a home since the beginning of time, but this, quite obviously, has not always been the case. This year, however, actually is and continues to be one of the best times in history to buy property, but analysts are wondering whether the Federal Reserve’s decision to keep interest rates low will work in the best interests of future buyers.
Ascertaining an answer to the short-term future of the housing market requires taking a look at the sales of new and existing homes. Sales have been steadily increasing for both, but they still remain low in comparison to historical figures. In July, annualized sales of existing homes reached 5.59 million, which is a 62 percent increase over five years ago and the highest sales have been since before the housing crisis.
New-home sales continue to hover around a post-recession high of 507,000, but they are still only at about 50 percent of the high reached during the pre-recession housing boom.
The Fed believes that keeping interest rates low will help increase sales of existing and new homes, but interest rates are only one piece of the puzzle. Data from the National Association of Realtors shows that affordability in July was at its lowest level since 2008 and that affordability peaked in 2012. However, sales of new and existing homes were lower at this time than they are now.
Another factor that is relevant to home sales is the ease of qualifying for a mortgage, but Fannie Mae’s Mortgage Lender Sentiment Survey released in August shows that qualifying conditions have loosened significantly.
