In the first years after the housing market crash, recent college graduates had a hard time finding jobs as the economy went downhill. The unemployment rate rose, and millennials who couldn’t find a job were forced to put on hold their plans of owning their own home.
Now that the economy is recovering and the unemployment rate is down around five percent, younger adults now have the ability to make a down payment on a home.
As a result, the housing market is seeing strong numbers on existing home sales, thanks in part to first-time buyers. Last month existing home sales hit a seasonally adjusted annual rate of 5.47 million, according to the National Association of Realtors.
September saw a bump up of 3.2 percent from August, and a 0.6 percent increase from the same time last year. First-time buyers helped spur strong September sales. First-time buyers accounted for 34 percent of September’s sales.
The increase in first-time buyers is possibly a signifier that younger adults are ready to dive in to the market, even as supply remains tight and affordability continues to be a factor. A year ago, first-time buyers made up just 29 percent of the buying force. However, since last year, first-time buyers appear to be returning to the market, continuing the housing recovery. Last month, 31 percent of buyers for were first-timers. Millennials in a recent survey cited student loans as one reason they were waiting to buy a home.
September’s strong numbers come after a down August. Low mortgage rates continue to be a help, however, the market’s overall supply remains limited. Economists consider a six-month supply of available homes to be a balanced market. However, in September there was just 4.5 months of homes available.
Last month did bring one more piece of good news: distressed sales were down to just four percent of the residential sales. Distressed sales include foreclosures and short sales, not since October 2008 when National Association of Realtors (NAR) started tracking the statistic were distressed sales such a small percentage of residential sales.
How will the housing market fare heading into the winter? Let us know in the comments your thoughts.