NAR: Existing-Home Sales To Hold Steady In 2015


An improved job market, rising wages, increased inventory and a slowdown in home price appreciation will combine to help boost existing-home sales slightly in 2015, the National Association of Realtors (NAR) forecasts.

During the 2014 Realtors Conference & Expo held last week, Lawrence Yun, chief economist for NAR, announced that existing-home sales this year are expected to reach 4.9 million, slightly below the 5.1 million pace seen in 2013. However, existing-home sales are forecast to reach 5.3 million next year and 5.4 million in 2016.

NAR also forecasts that home prices will rise by about 4% in 2015.

‘The improving job market has consumers feeling more confident, and the rebound in home prices is building household wealth for homeowners and giving them the ability to sell after waiting the last few years,’ Yun said in a report about the conference posted to NAR's website.

However, the housing market will continue to face headwinds that will likely hold it back, Yun said. Citing NAR's monthly Realtors Confidence Index, which has decreased this year while consumer confidence has risen, Yun said Realtors are generally optimistic, but certain factors such as inventory shortages in parts of the country and tight lending standards may be playing a role in their recent dip in confidence.

‘Multi-family housing starts have rebounded back to normal since the downturn mostly due to the strong demand for renting,’ said Yun. ‘On the other hand, single-family housing starts are still lagging as smaller homebuilders continue to face difficulty obtaining construction loans, and some have even gone bankrupt. Single-family construction still needs to increase to alleviate supply shortages and keep up with the pent-up demand.’

Yun said renter households have increased by 4 million since 2010 while homeowner households have decreased by 1 million.

‘The typical homeowner today has a household net worth of around $200,000,’ he said. ‘Meanwhile, renters aren't benefiting from the rise in prices and are facing annual increases of their own in the form of higher rents.’

In addition to lagging inventory and rising rents, Yun said tight credit standards, an increase in multi-generational households, and student debt are contributing to a decrease in first-time buyers to a low not seen since 1987.

Still, NAR is cautiously optimistic about 2015: Yun said while he expects inflationary pressure to force the Fed to raise short-term rates in the first half of the year, resulting in mortgage interest rates climbing to slightly below 5% next year and reaching 6% in 2016,
‘the impact â�¦ on affordability will be minimal as long as job creation keeps pace.’

‘Furthermore, if the credit box slowly begins to open up, that will also mitigate the impact of rising rates,’ he added.

Joining Yun at the 2014 Realtors Conference & Expo was Mel Watt, director of the Federal Housing Finance Agency, and, by way of video link, Julian Castro, commissioner of the U.S. Department of Housing and Urban Development. For more, click here.

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