The U.S. housing market is having a moment. Sales of existing homes are at a nine-year high and prices are up, signaling that buyers are ready to put their money down on new properties as interest rates remain low. And as millennials continue to get older and look to settle down, the housing sector could see a flurry of new homeowners.
The median sale prices for new homes was $294,600 in June and home prices were expected to increase by 5 percent overall this year. Trends suggest big homes are in demand, especially if they pack in amenities. The number of new homes 4,000 square feet or more grew by 22 percent from 1999 to 2015.
But for first-time home buyers, that means there are fewer starter homes to pick from. During that same time period, the number of new, single-family homes under 1,400 square feet dropped by 75 percent.
"We’re seeing low inventory in places not usually associated with housing shortages—places like Nashville, Raleigh, and even Kansas City," National Association of Realtors chief economist Lawrence Yun told Time.
There are other signs that the market hasn't fully recovered yet. New construction in May stood at an annual rate of 1.138 million, but 1.5 million homes are needed to meet demand.
After the housing bubble popped in 2007, the homeownership rate fell from 69.2 percent to 62.9 percent this year. The housing market recovery has come in fits and starts across the U.S. In San Francisco, prices have jumped by more than 50 percent since 2011, while real price growth in Boston has mirrored the national average of 15 percent. In New York City's tony Manhattan borough, the number of closed sales slowed by 14 percent this year, while resales jumped 25 percent.
"We don’t want these big peaks and valleys we’ve seen since the downturn," National Association of Realtors president Tom Salomone told the Huffington Post. "Steady, sustainable growth is what we’re after."