Now that the housing market has been decimated for a half decade, signs are pointing to a possible comeback. But is it a false positive?

Housing Sales Are Making A Comeback

According to the numbers, housing re-sales are making a comeback, even though it is a small one. February saw its highest sales in three years with prices soaring but does that mean that you should make the leap to sell your home or even buy one? Better yet, do the small economical sign of recovery mean that the housing market is finally showing signs of life? You might want to take into account that the amount of homes put on the market has increased as well.

Housing Sales Jump

Just this past week, the NAR (National Association of Realtors) stated that housing sales jumped almost a full percent to a yearly rate of 5 million units, and that number is just in February’s market, which is the highest it’s been for 2 and a half years. Actually the pace has been steadily gaining ground over the past few months. But critics are still skeptical on whether potential homeowners should sell or buy homes. 

The Economists Predictions

Economists around the world expected sales to hit the mark, which it did. The average home took about two and a half months to sell during the month of February which is almost a full month from just last year. These are the kind of numbers that have some economists and homeowners very excited about the next few months. They see the rise in home sales as just one more indication that the market is gaining ground. Even data has shown that builders are breaking more ground than usual in efforts to push permits along for any future construction efforts, which reached a mark it hasn’t seen for five years.

Economists say that with overall economic fundamentals improving, they expect housing activity to continue to improve, which will provide the world with the supportive backdrop it needs for a more general recovery. In the U.S., an accommodative monetary policy pushed by the government’s Federal Reserve, has held housing rates at or near record lows. This has helped lift the market to where it is today and give the economy the support it needs to strive.

Any number of people looking to own or sell a house is looking for news like this and the central bank acknowledged that the housing market is doing everything that is expected of it so far. Even though this is the case, the bank still looks to purchase the $85 billion in Treasury and mortgage bonds every month, stating that there are risks to not doing so. The renewed financial issues across the pond in Europe and the tighter fiscal policy are just a couple. 

Unsold Homes

But there are dark linings to every silver cloud. Last month, unsold homes were at 9.5% to level out at 1.94 million. That showed an increased in sales, something of which is usual every February. As a homeowner, you want to make sure that there is still a healthy balance of supply and demand. In previous months, the housing market was being held back by the overwhelming number of unsold homes. In the past six months or so, the number of homes sold has increased, but only modestly. 

This false hope is exactly what the country does not need. Pushing buyers into a housing market where the sales are lagging might seem promising but what if it fails? The recession could turn into a full blown depression.


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