Despite Recent Dip, Housing Market Looks for Spring Uptick

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Despite Recent Dip, Housing Market Looks for Spring Uptick

Winter has never been a popular time to buy to home but a recent dip did have some economists concerned. In January home sales fell 1.2% from the prior month, leading some to ponder whether it was a sign of a larger slowdown. However, as CNN Business reports, analysts have a few reasons to believe this spring will see homes sales bloom once again.

The first factor adding to this optimism is the expectation that the Federal Reserve will be keeping interest rates at the same level for a while. After several rounds of steady increases, the Fed’s new dovish tone could help bring homebuyers to the table. What’s more, there’s hope that those who may have been waiting to see where rates went may now take advantage of the Fed’s pause. Speaking to CNN, First American deputy chief economist Odeta Kushi explained, “We have a ton of pent-up demand from older Millennials sitting on the sidelines waiting to be homeowners. Lower rates should push up home sales.”

Also giving analysts hope for the spring market is the continued wage growth cited in Labor Department reports. For example, although February’s jobs number were relatively weak, the average hourly wage rose 3.4% year over year. That actually marks the largest YOY increase in a decade. Obviously consumers making more money means they’ll have greater funds for down payments and feel more secure taking on a mortgage.

Last but not least, following a shortage in supply in some markets, construction of new homes has been picking up as well. Citing increases in both home construction and completions, Joel Kan of the Mortgage Bankers Association said, “We are starting to see signs of more new residential construction and inventory, which increases buying opportunities for the many home shoppers who have been hampered by the ongoing lack of supply.” Just as important, Kan notes that the number of loan applications for homes increased by 2.3% this month, concluding “The housing market remains poised for a strong spring.”

After a down month, it seems that home sales are poised to rebound. It’s also worth noting that the SPDR S&P Homebuilders ETF is going strong, gaining 17% this year so far. This added in with other factors such as interest rates leveling out while wages and inventory rise spells a potentially prosperous spring for the U.S. housing market.

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Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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