HOME SALES REBOUNDING, EXPECTED TO FINISH THE YEAR AT THEIR HIGHEST PACE SINCE 2006
According to the National Association of Realtors, existing-home sales are expected to finish the year at their highest pace since 2006, but accelerating price growth and rising mortgage rates have the potential to slow sales in the coming months.
Lawrence Yun, chief economist of the National Association of Realtors, said existing-home sales are measurably higher than a year ago, and strengthened in March as more buyers entered the market as the spring buying season got underway.
“Sustained job growth and interest rates below 4 percent have been the catalyst behind the improvement in sales,” said Yun, who expects home sales to rebound and steadily improve, ending up at a pace around 5.30 million (the highest since 2006) this year and 5.5 million in 2016.
As the buying season heats up, low inventory of homes for sale needs to increase measurably to meet the pent-up demand for buying.
Referring to NAR’s recent study looking at wealth inequality, Yun said rising home prices in many metro areas have helped homeowners build housing wealth in recent years, but the continued decline in homeownership means the gains are going to fewer people and leading to worsening inequality. “Household net worth is at an all-time high, but the gains are mostly going to wealthier households, who in turn have helped propel vacation home sales to record levels,” he said.
Yun expects the U.S to start entering a rising interest rate environment, with the Federal Reserve increasing short-term rates in September and mortgage interest rates gradually moving upward over the next year, hovering around 4 percent in 2015 and edging-up past 5 percent in 2016.
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