Existing-home sales are poised to see their best year in a decade, but low supply and affordability still threaten to keep the homeownership rate down, according to the National Association of Realtors.
Lawrence Yun, chief economist for the NAR, recently presented his 2017 midyear forecast. According to Yun, the first quarter saw the best quarterly existing-home sales pace in 10 years with 5.62 million. Yun said he expected that pace to stay on track and finish around 5.64 million, 3.5% above 2016 and the best rate since 2006. The national median existing-home price is also expected to rise around 5% this year, according to the NAR.
“The housing market has exceeded expectations ever since the election, despite depressed inventory and higher mortgage rates,” Yun said. “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence are giving more households the assurance and ability to purchase a home.”
While sales are running at a 10-year high, Yun believed that with the healthy labor market, they should be even higher. However, with prices rising and too few listings in the lower- and mid-market ranges, many prospective homebuyers are finding themselves priced out.
“Limited lots, labor shortages, tight construction lending and higher lumber costs are impeding the building industry’s ability to produce more single-family homes,” Yun said. “There’s little doubt first-time buyer participation would improve and the homeownership rate would rise if there was simply more inventory.”
And while Yun projected that housing starts to jump 8.4% to 1.27 million this year, that’s still well under the 1.5 million new homes needed to offset sluggish building in recent years.
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