National predictions are for homes sales to hold steady in 2014, while prices continue to rise, according to NAR Chief Economist Lawrence Yun, speaking at the November NAR Convention. He expects the national median existing-home price, currently at $197,000, to increase nearly 6 percent next year.
Mortgage interest rates are expected to trend upward and reach 5.4 by the end of next year. With higher mortgage interest rates, he expects refinancings to collapse in 2014 to the lowest level in at least 15 years, and hopes purchase applications will begin to rise. He noted that “even with cheap mortgages for the past four years, all-cash buyers stayed high, accounting for over 30 percent of sales nationwide.”
Limited supplies remain a big factor, with inventory bouncing around 13-year lows, and seriously delinquent mortgages have been trending steadily down. “Housing starts are the only way to alleviate inventory shortages. Housing starts need to rise 50 percent to meet underlying demand,” according to Yun.