Existing-Home Sales Forecast Shows Promise in 2014

Chief economist Lawrence Yun of the National Association of Realtors (NAR) announced Friday that he expects a steady increase in existing home-house-price-increasesales as prices continue to grow.

Yun spoke at the 2013 Realtors Conference & Expo where he predicts that existing-home sales will be up about 10% in 2013 to 5.13 million. He expects sales in 2014 to hold steady at 5.12 million.

The national median existing-home price should end this year at $197,000, just about 11% higher than 2012. Next year the growth in existing-home price is expected to cut in half by just about 6 percent.

Yun says that existing-home sales have shown a 20% cumulative increase, while prices have gained 18 percent. Despite the increase in existing-home sales, incomes have barely risen – only somewhere between 2-4 percent. He says “We’ve come off of record high housing affordability conditions in the past year, and are now at a five-year low, but conditions are still the fifth best in the past 40 years.” Yun goes on to note that the median-income family should still be quite well positioned to buy a home in 2014 in many areas.

In regards to 2014 housing production, Yun forecasts 1.13 million starts and 917,000 through the end of 2013. Unfortunately, these metrics still fall short of the underlying demand of about 1.5 million.

Sales of new homes are expected to total 429,000 in 2013 and 508,000 in 2014.