California home sales to rise with inventory in 2014

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After declining this year, home sales in California will rise in 2014 along with inventory, according to a forecast released today from the California Association of Realtors.

The trade group anticipates existing, single-family home sales in the Golden State will rise 3.2 percent next year, to 444,000, after a 2.1 percent decrease this year. California’s median home price is set to rise 28 percent this year, to $408,600, and is expected to increase an additional 6 percent next year to $432,800.

“We’ve seen a marked improvement in housing market conditions in a year with the distressed market shrinking from 1 in 3 sales a year ago to less than 1 in 5 in recent months, thanks primarily to sharp gains in home prices,” said CAR Vice President and Chief Economist Leslie Appleton-Young in a statement.

“As the market continues to improve, more previously underwater homeowners will look toward selling, making housing inventory less scarce in 2014. As a result of these factors, we’ll see home price increases moderate from the double-digit increases we saw for much of this year to mid-single digits in most of the state.”

“The wildcards for 2014 include federal, fiscal, monetary and housing policies — such as the mortgage interest deduction and mortgage finance reform — as well as housing supply and the actions of the Federal Reserve, which will ensure a higher rate environment,” she added.

The trade group projects 30-year fixed mortgage interest rates to rise to an average 5.3 percent in 2014.

Source: CAR