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A housing shortage is driving up prices

On Behalf of | Mar 23, 2017 | Residential Real Estate

A shortage of houses in Delaware and across the country is being cited by industry experts as the reason for rising prices and a sharp fall in home resales in February. The National Association of Realtors revealed on March 22 that sales of existing homes fell by 3.7 percent in February to a seasonally adjusted rate of 5.48 million units. However, year-over-year sales were still up by 5.4 percent and the January seasonally adjusted sales numbers were the highest observed in a decade.

The increase in home prices was more profound. Houses sold for an average price of $228,400 in February, which represents an increase of 7.7 percent over the same period a year ago. Homeowners may be happy to hear that this means residential real estate values in the United States have now been growing steadily for five full years. While interest rates rose slightly in December, economists do not believe that higher mortgage rates have greatly affected the housing market. The average rate for a 30-year fixed-rate mortgage in the United States has now climbed to about 4.3 percent.

Labor shortages, higher borrowing costs and rising raw materials prices have made life difficult for the nation’s homebuilders in recent years, and housing inventories in the United States have fallen for 21 consecutive months as a result. The National Association of Realtors says that it will take between 1.5 million and 1.6 million new homes to alleviate the current housing shortage.

Buyers and sellers in residential property transactions have a lot at stake, and tensions can mount when closings are delayed due to paperwork problems or title issues. Attorneys with experience in this area could help their clients to avoid such frustrations by drafting purchase and sale agreements that accurately describe the property involved and clearly list the financial obligations of the buyer and seller.