Sun01162022

Last updateMon, 15 Jun 2020 10pm

Back You are here: Home News News Business Area home sales up in second quarter; low rates a prime factor

Area home sales up in second quarter; low rates a prime factor

Log in to save this page.
sold

With first-time home buyers playing a big role, home sales in the Peoria are saw solid growth in the second quarter, according to the Peoria Area Association of Realtors.

Home sales were up 4.6 percent from a year ealier and the median home sales price increased 2.4 percent, up to $128,000, during the second quarter, the association announced Wednesday.

There were 1,583 sales in the second quarter, compared with 1,513 in the second quarter of 2014, the association said.

While the median sales price increased from $125,000 to $128,000, the average price was up 3.6 percent, from $151,651 in the second quarter of 2014 to $157,122.

Phil Harvey, president of the Peoria Area Association of Realtors, attributed the gains to consumer optimistic and continued low interest rates, among other factors.

“Buyers are optimistic and eager to lock in mortgage rates at these low levels before an expected rise in rates later this fall. Pent-up demand, solid job creation and individuals feeling more secure about their finances is attributing to the boost in overall buying activity,” Harvey said.

“Foot traffic continues to signal a positive trend for home sale activity throughout the remaining summer months, but we need to keep an active pace with newly listed inventory," he added.

The National Association of REALTORS reported there is a rising number of first-time buyers into the market. The number of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. Nationally, existing home sales hit their highest market since 2009. 

PAAR said aea employment conditions also are having a positive effect on the housing market. May was the 15th consecutive month that unemployment rates fell in every metro area in the state compared with last year, according to the Illinois Department of Employment Security. The Peoria metropolitan area unemployment rate was 5.4 percent in May, slightly better than the statewide rate of 5.6 percent.
Harvey said the growth in the number of first-time home buyers is noticeable and added it is because of improving labor conditions, less expensive mortgage insurance and low down payment options that were introduced earlier this year.

“The number of first-time buyers and millennial buyers in the market should continue to grow as we see expanded household formation and improving economic conditions. The big wild card will be how any increase in mortgage interest rates will affect the housing market and affordability conditions for future buyers,” Harvey said.

Millennials (ages 22-35) are expected to drive two-thirds of household formation over the next five years, according to realtor.com.

“The Federal Reserve is expected to raise short term rates this fall, which may lead to an uptick in mortgage interest rates,” said Harvey. “For sellers this is a prime time to be placing their home on the market with the rising numbers of buyers who are looking for the right home to purchase so they can close before the end of summer.”

According to the June Fannie Mae Mortgage Sentiment Survey mortgage lenders are seeing an increase in mortgage demand from borrowers with more lenders reporting credit loosening. “Area lenders are reporting brisk activity in closing loans as a result of the steady stream of buyers who are purchasing housing,” said Harvey.

In the North Central region the average for a 30-year fixed-rate mortgage was 3.97 percent in June, according to the Federal Home Loan Mortgage Corporation (Freddie Mac). That was down from 4.08 percent in June a year ago.

About the Author
Paul Gordon is the editor of The Peorian after spending 29 years of indentured servitude at the Peoria Journal Star. He’s an award-winning writer, raconteur and song-and-dance man. He also went to a high school whose team name is the Alices (that’s Vincennes Lincoln High School in Indiana; you can look it up).