Consumer confidence in the housing market is soaring.
That’s true of homes with a two- to four-bedroom.
In fact, home shopping is surging even among the most likely buyers of such homes: the young adults. The number of housing purchases by those younger than 35 has risen 22 percent since 2012, while it has stagnated at about 19 percent for sales of two- to four-bedroom homes, according to a new survey by the National Association of Realtors.
“Young adults are starting to feel the effects of the decline in home ownership rates over the past five years,” the report says. “The new homebuyer boomerang looks to reverse in 2019 as affordability, family growth and job security continue to drive homeownership among young adults.”
A report in March said that 60 percent of households in the U.S. were renting, compared with 65 percent five years ago.
The National Association of Realtors points to a number of reasons behind the surge. Rising stock prices and a booming stock market are contributing to a surge in home prices, which in turn has made borrowing more affordable for young adults. A strong economy has also created more jobs, according to economists, and more households than ever are benefiting from rent control.
The latest job report — 67,000 new jobs added in September — could have added momentum to the trend. The report suggests that low mortgage rates and rising wages are also helping consumers plan home purchases. But the rise in homeownership is now giving way to a surge in purchases of single-family rentals, which are increasingly popular among young Americans.
For rentals to become as popular as they are among young adults, though, prices will need to stay low. That’s a major obstacle, said Lawrence Yun, chief economist for the National Association of Realtors. “Although it is encouraging to see young adults attracted to purchase new homes, it would be good news if they were able to afford them and in turn consume a large portion of their disposable income,” he said.
Still, as more people consider owning their own home, and as existing homeowners hold onto them longer, the market for homebuilding is booming. Together, the robust economy and housing market have buoyed the bottom line of building companies and allowed the industry to deliver record profits.
The National Association of Realtors reports that, while sales of existing homes have cooled this year, there are buyers who will be looking for new homes in the next three years, citing lower prices and improved affordability. The number of residences that will be built this year is expected to have an all-time high of 1.075 million, the Realtors says.
And nationwide, there are signs that Americans are feeling confident about the housing market again.
Its forecast calls for sales to increase 2.5 percent in 2019, reaching about 1.1 million homes. And the Realtors predicts that prices will climb 7.2 percent.
