Existing-home sales were at a seasonally adjusted annual rate of 5.29 million as of the end of the first quarter – slightly higher than the annual pace of 5.26 million recorded at the end of the first quarter in 2015, according to the National Association of Realtors (NAR).
As a result, NAR is forecasting that this could be the strongest year for existing-home sales since 2006.
“The housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fueled by the grossly inadequate number of new single-family homes being constructed,” said Lawrence Yun, chief economist for NAR, during his midyear economic and housing forecast, which he presented during the recent Realtors Legislative Meetings & Trade Expo. “The good news is that pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer.”
Demand has mostly remained strong – especially in the top job-producing metro areas – and is being upheld by mortgage rates near three-year lows and the 14 million jobs gained since 2010, Yun explained.
Yun forecasts that existing sales will finish 2016 at a pace of around 5.40 million – the best year since 2006 (6.48 million). After increasing 6.8% in 2015, the national median existing-home price is forecast to increase between 4% and 5% this year.
Also speaking at the Expo was Sen. Elizabeth Warren, D-Mass., who told the crowd that student debt is one of the major factors holding back home sales. She pointed out that seven out of every 10 college graduates are thousands of dollars in debt due to student loans. Many of them spend countless years afterward repaying the debt at high interest rates.
“Student debt is crushing young people – it’s hurting the nation’s economy and delaying the opportunity for many to buy their first home,” said Warren, who cited NAR’s 2015 Profile of Home Buyers and Sellers data on the percent share of first-time buyers remaining at its lowest point in nearly three decades (32%). “Every monthly payment going to reducing their student debt could instead be money going toward saving for a down payment on a house.”
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