The real estate market will continue its road to recovery in 2014, with home prices rising 6 percent and mortgage rates hitting 5.4 percent. In addition, demand is predicted to plateau, all according to Lawrence Yun, chief economist and senior vice president of Research for the National Association of REALTORS®, who presented his 2014 market forecast during last week’s REALTORS® Conference and Expo.
Other factors aim to set the market back on the right path. Although there could be a possible negative impact due to rising mortgage rates, job creation and loosening underwriting standards should balance out 2014’s sales volume.
“There were two million jobs created in the past few months and we’ll see the same next year,” says Yun. “These people could potentially enter the market.”
Yun does not see, however, an increase in unit sales nationwide, as inventory levels remain an issue to keep an eye on. Currently, the nation is under one million and this number needs to increase 50-60 percent in order to get back to normal numbers.
“I don’t foresee that next year, but maybe we can at least make up half the needed gain to steadily reduce the inventory pressure,” he says.
While existing home sales are expected to remain flat at roughly 5.1 million units, new homes could rise by 25 percent from 430,000 to 510,000 next year. This part of the market is still in recovery due to the difficulties for smaller builders to obtain financing. This should continue easing throughout the next year.
