A harsh winter might have held back would-be homebuyers from taking the plunge, but they appear to be jumping back into the housing market this spring. And despite an increase in prices, real estate still looks like a good value to me.

In March, existing home sales jumped by 13.5% year-over-year as the spring buying season got underway. And prices appear to have more than stabilized – they are up 7.8% over the past year.

Demand appears to have reduced available inventory to near its post-Great Recession low, as this chart of current inventory (right axis) versus median sales price (left axis) shows.

median-sales-price-vs-housing-inventory

This stabilization in the market is obviously helping realtors, but also homebuilders and many companies in the housing and construction sectors. It’s also a significant contributor to a rebound in household wealth and consumer confidence.

It’s almost possible now for many people to forget the dark days of the U.S. housing market.

This is all good news. But by no means is housing a rampant bull market yet. It’s just an improving one. And I think that investors can still find decent values in real estate, and housing and construction-related stocks.

It’s worth looking at a few more charts to better understand exactly why the U.S. housing market still has room to grow, and why real estate prices have room to gradually move higher (or at least remain stable).

Even though prices are recovering nicely, housing affordability is still extremely high. In fact, according to the National Association of Realtors, housing affordability is just a little below all-time highs, and well above the long-term average dating back to the 1970s.

housing-affordability-index

Part of the formula used to calculate housing affordability is mortgage rates. And looking at this metric by itself shows why potential homebuyers are snatching up available inventory.

Despite all the debate surrounding the Fed’s specific timing on interest rate hikes, the fact remains that interest rates – and therefore mortgage rates – remain near historical lows. This chart shows 30-year mortgage rates since the 1990s.

At 3.8% right now, rates are still incredibly attractive. In fact, if you’re even considering buying a house, it’s probably a good idea to get a move on, because it’s hard to believe that these rates will be around much longer.

30-year-fixed-rate-us-mortgage-average

With interest rates low, affordability up and home values on the rise, consumers appear to be ready – and as importantly, willing – to snatch up the available real estate.

I think this will continue to be the backdrop for 2015 and 2016. And to me that means it’s still wise to be looking for good values in physical real estate, as well as housing and construction-related stocks.

I’m going to get back into this topic on Thursday. In fact, there’s so much I want to cover I’m going to hold a webinar later this week to discuss the housing market, the construction industry and a few specific stocks. If you’re interested, click here to sign up.

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Published by Wyatt Investment Research at