The National Association of Realtors is forecasting that home prices will continue to post gains next year, but that sales of existing homes will be flat due to headwinds including declining affordability, limited inventory and tight mortgage lending standards.
Sales of existing homes have grown by cumulative total of 20 percent during the past two years, and prices are up 18 percent, said NAR Chief Economist Lawrence Yun. But incomes have risen only 2 to 4 percent over the same time, which makes homes less affordable. Although affordability is at a five-year low, that’s still the fifth-best level in the last 40 years, Yun said.
Yun is projecting that when the final numbers for 2013 are in, sales of existing homes will be up 10 percent from last year, to 5.13 million, but will hold steady at 5.12 million next year. Yun expects to see inventory shortages again next spring, as builders need to boost housing starts by 50 percent to meet underlying demand. Source: realtor.org