Home prices will continue to rise next year while sales hold steady, predicts the National Association of Realtors.
Speaking at NAR’s annual conference, the association’s chief economist, Lawrence Yun, said that he believes existing home sales will remain relatively flat, while prices rise by 6%; considerably less than the 11% gain we’ve seen this year. He predicts interest rates, which are currently at 4.16%, will jump to 5.4%.
According to the Wall Street Journal, Yun based his outlook on the opposing forces of rising interest rates, which negatively impact sales, and a strengthening job market, along with “potentially more lenient mortgage-qualification standards.”
The low supply of homes for sale, now at a near a 13-year low, will also impact home sales.
“The inventory shortage will not go away,” Yun said, noting that those who will be enticed to put their home on the market because of rising home prices will also buy homes. Yun says that new home construction is needed to raise inventory levels.
In predicting which markets will perform best in 2014, Yun sees Salt Lake City, Houston, Denver, Seattle, Tampa and Atlanta doing well because of their strong job markets.