By Jeff Clabaugh
The National Association of Realtors expects home prices and sales to continue rising next year, and with rising mortgage rates, housing affordability will continue to fall.
The Washington-based association forecasts existing home prices to rise another 6 percent in 2014, compared to an 11 percent gain this year. It also expects long-term mortgage rates to reach 5.4 percent by the end of 2014.
Over the past two years, existing home prices have risen 18 percent, while personal incomes have risen just 2 percent to 4 percent in that same time, pushing housing affordability to a 5 year low.
The trade group also sees continued tight inventory heading into next spring’s housing market and says new home construction needs to increase to alleviate the shortage of inventory for sale.
Housing starts need to rise 50 percent to meet underlying demand, NAR says.