US property sales set to grow at a more moderate pace in 2016
Image Following the housing market’s best year in nearly a decade, existing home sales in the United States are forecasted to expand in 2016 at a more moderate pace.
Pent-up buyer demand is expected to combat affordability pressures and meagre economic growth, according to the latest monthly report from the National Association of Realtors.
Indeed, Lawrence Yun, NAR chief economist believes that demand, sustained job growth and improving inventory conditions are the main reasons for an expected gain from 2015 in new and existing home sales.
Despite his forecasted increase in sales, Yun cites rising mortgage rates, home prices still outpacing wages and shaky global economic conditions as headwinds that will likely hold back a stronger pace of sales.
‘This year the housing market may only squeak out 1% to 3% growth in sales because of slower economic expansion and rising mortgage rates. The continued rise in home prices will occur due to the fact that we will again encounter housing shortages in many markets because of the cumulative effect of homebuilders under producing for multiple years. Once the spring buying season begins, we'll begin to feel that again,’ Yun explained.
With one month of data remaining for 2015, Yun expects total existing homes sales to finish the year up 6.55 from 2014 at a pace of around 5.26 million, the highest since 2006, but roughly 25% below the prior peak set in 2005 of 7.08 million.
The national median existing home price for all of 2015 will be close to $221,200, up around 6% from 2014. In 2016, existing sales are expected to grow between 1% and 2%, 5.3 to 5.4 million and prices between 5% and 6%.
