"Home prices have risen for the past three years cumulatively about 25 percent, which boosts confidence in the market and traditionally gives current home owners the ability to use their equity buildup as a down payment towards their next home purchase," says Lawrence Yun, NAR's chief economist. "Furthermore, first-time buyers are expected to slowly return as the economy improves and new mortgage products are made available in the marketplace with low down payments and private mortgage insurance."
Still, Yun points to several "speed bumps" that could jeopardize the pace of the housing market's recovery, particularly the anticipated rise in mortgage rates expected to arrive this year. Yun points out that many home owners who have locked in some of the lowest mortgage rates in history in recent years may be more hesitant to give up their low financing rate to move. Lenders are also being slow to ease underwriting standards to more normalized levels.
Still, in a preliminary analysis, existing-home sales appeared to finish out 2014 around 4.94 million, a drop of 3 percent from 2013. But Yun anticipates that sales will rise to 5.3 million in 2015.
Yun is also forecasting growth in home prices, but at a more moderate pace than seen in recent years. The national median existing-home price for 2014 will likely near $208,000, up 5.6 percent from 2013, but it's expected to moderate between 4 percent and 5 percent growth in 2015
Source: National Association of REALTORS®
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