Home sales have lagged expectations so far this year, but one indicator suggests the housing market may be set for a rebound.
Housing confidence and sentiment about buying and selling are pointing to a more balanced market and an economic backdrop that supports homeownership, according to the Pulsenomics Housing Confidence Index , out Wednesday.
Pulsenomics is an independent research firm that specializes in real estate data analytics. A few years ago, MarketWatch profiled its founder, Terry Loebs, who has a long background in home price forecasting. The firm polls economists, analysts, and strategists on their expectations for prices in the future.
For overall housing sentiment, the company surveys thousands of ordinary American households. Confidence, as measured by the Composite 20 index of the largest metro areas, hit a 5-year high of 71.65 in the first quarter. Any index reading over 50 signals improvement.
The first quarter also represented what Loebs calls “a healthy meeting of the minds” between would-be buyers and sellers.
What’s going on?
The economy — wage growth, specifically — has finally improved enough to make consumers confident about homeownership, Loebs said in an interview, even as media attention on the flagging housing market last year gave hope to some wannabe buyers. Lower mortgage rates since the start of 2019 are also helping.
Meanwhile, more and more homeowners are finally realizing that now might be an okay time to sell. (As MarketWatch has documented in the past, sellers often have to be confident in their ability to compete as buyers in order to feel comfortable listing their properties.)
Sales of previously-owned homes have fallen in three out of four months this year, although new-home sales are running about 7% higher than last year’s pace. Meanwhile, home prices accelerated in April for the first time in a year.