Pending home sales jumped 3.1% in February, handily beating expectations of 0.3%. The index grew at its highest rate since August 2013. According to new data from Zillow (Z), the housing market will continue to soar this year.
The Zillow Housing Confidence Index shows that 5.2 million U.S. renters have said that they’ll buy homes in 2015. That’s a 25% jump from the same time last year and 12% of the entire U.S. rental market.
Nearly 60% of all renters surveyed said that buying a home is the best long-term investment a person can make. This is partially due to low mortgage rates—according to Zillow, the average homeowner now spends 15% of their income on monthly mortgage payments compared to a historical average of 22%. Rents are also rising quickly, making renting appear less desirable than homeownership, according the Zillow Chief Economist Stan Humphries.
“Rents have never been less affordable than they are right now, with people spending almost 30% of their incomes nationally on rents. So if you’re a renter, you’re highly incentivized to get over into homeownership,” Humphries tells Yahoo Finance.
According to Zillow, renters and homeowners were most confident in the housing markets in San Jose, Calif., Miami and San Francisco. “There is a dynamic where past gains in home prices start to fuel future expectations. So there is a little bit of a danger of this dynamic being built in where people in the Bay Area are expecting these 5% to 10% appreciation rates,” says Humphries. “Because we’re seeing healthy appreciation there but it is coming down quickly.”
Americans were least confident in the Detroit, St. Louis and Chicago housing markets.
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