There have been a lot of developments in real estate over the past several months, including a report that says first-time buying is at an historic low.
If a heavy client load has prevented you from staying abreast of what's going on in the real estate market, the industry has been experiencing a series of "firsts" as of late, with the most recent one serving as a bit of good news.
For the first time in 2014, existing-home sales surpassed the number reported in the corresponding month last year, according to the National Association of Realtors.
In October, total existing-home sales increased 1.5 percent to a seasonally adjusted annual rate of 5.2 million, from 5.1 million in September. This marks the first time existing-home purchases were higher than year-ago levels, up 2.5 percent from last October.
"Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth," said Lawrence Yun, NAR chief economist. "Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year-over-year sales increases."
The employment market has also made a positive turn in recent months, with the jobless rate now under 6 percent, the first time it's been below this level since 2008, according to the Labor Department.
The median existing-home price for all housing types in October was $208,300, roughly 5 percent ahead of the same month last year. This hasn't adversely affected demand, however, thanks to mortgage rates reaching lows under 4 percent for the first time in 2014.
For the week ending Nov. 20, 30-year fixed-rate mortgages averaged 3.9 percent, according to Freddie Mac's most recent Primary Mortgage Market Survey. At this time last year, 30-year FRMs averaged 4.2 percent.
As real estate agents likely already know, mortgage rates throughout all of 2014 have been at or above 4 percent. At their highest, 30-year FRMs averaged 4.4 percent in January. Prior to this past week, the last time interest rates were in the 3 percent range was in May of last year.
Fewer first-time buyers in the market
Though rates are subject to change at any given time, their affordability may help incentivize first-time home buyers to enter the marketplace, as many have stayed on the sidelines this year, according to recent data.
First-time buyers in 2014 fell 5 percentage points, accounting for roughly 40 percent of people who are in the market to purchase a residence, according to NAR's annual survey. That represents the lowest share of first-timers since 1987, when approximately 30 percent of buyers were in the market for the initial time.
"Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who've experienced limited job prospects and flat wage growth since entering the workforce," said Yun. "Adding more bumps in the road, is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums."
This segment of the market is primed for a turnaround heading into 2015, Yun stressed. Among the factors that should encourage more first-time buyers to consider buying is stronger job creation, underwriting standards that have been "dialed down" and the return of mortgage products that enable individuals to put a smaller down payment on a home so that they can pay for mortgage insurance, the Wall Street Journal reported.