The nationwide outlook on residential home sales for next year is steady, but with rising prices due to a low inventory of homes for sale.
The National Association of Realtors (NAR) predicts this sharp reversal from the past two years in which existing home sales increased from the year before.
What’s Bogging Down the Sales?
- Lack of income growth – Markets with stronger job growth will fare better next year. The best performing housing markets next year will likely include Salt Lake City, Houston, Denver, Seattle, Tampa and Atlanta according to Lawrence Yun, NAR’s chief economist.
- Higher home prices – While rising home prices will attract more sellers, many of those people will also purchase homes. Zillow’s panel of 108 economists and real estate experts predict home values will end 2013 up 6.7% over last year and rise 4.3% next year. The median home price is currently about $200,000 for the U.S. Yun suggests it will rise 6% next year after an 11% gain this year.
- Rising Interest Rates – By the end of 2014, NAR forecasts the average 30-year fixed mortgage rate will hit 5.4%. Rates will rise as the Federal Reserve pulls back on the stimulus measures. Lenders need to loosen home lending standards to expand the pool of potential home buyers and hey may do so now that demand for re-financing has declined.
- Low existing home inventory – Existing home inventory is now near a 13 year low and this shortage will not go away. New home construction is needed to up the inventory.
I am an estate specialist in Pinecrest, Coral Gables, Coconut Grove and Key Biscayne. If you would like to schedule a buyer or seller meeting, feel free to call me directly at 305-898-1852 or drop me a note at Wellins.D@ewm.com.