Builders and Buyers Agree: The Real Estate Market is Booming

A home for sale. Used under Creative Commons.

There appears to be little slowing down of the real estate market this summer. Recent surveys of home builders and buyers revealed that both groups are feeling positive about the state of the market as home prices and home sales continue to do well.

Homebuyer confidence broke records in July, with overall feelings about the housing market hitting 86.5 on the Home Purchase Sentiment Index (HPSI) by Fannie Mae. July’s reading was up 3.3 points from June. All six of the portions of the index increased, a solid sign that the buyers are enthusiastic about the real estate market.

The HPSI also reported that 67 percent of participants said they would buy a home if they had to move. The percent of people who said they would rent if they moved dropped to 26 percent, the lowest percentage reported on the National Housing Survey®.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) saw builder confidence rise to 60 from July’s score of 58. Scores above 50 indicate that more builders perceive the market as in good condition.  Of the four regions (Northeast, Midwest, South, and West) in the index, three of them saw increases in August from the previous month. Only the Midwest lost ground, finishing two points down at 55.

Also helping fuel the strong market is the low employment rate. In July the rate remained at 4.9 percent for the second month in a row. In 2016 the rate has not passed five percent. Economists generally consider an unemployment rate of five percent as full employment for the country. During the economic downturn that came out of the housing market bubble, the unemployment rate was as high as 10.2 percent in 2009, and it wasn’t until late 2014 that the rate dipped below six percent.

With the housing market continuing at such a strong pace, how long do you expect it to last? Leave your predictions in the comments below.