Home Sales Are Up -Forecasts Points To Increased Sales In 2013
Have you ever wondered what really is going to happen in the house market? Has the market truly hit bottom. I have put together some clear research proving the point that housing is back, and we are clearly going to be on the rise again based on the following:
- Positive underlying economic factors are helping relieve a pent-up housing demand according to a National Association of Realtors mid-year report.
- Historically high housing affordability conditions, on-going job creation, a solid stock market recovery, rising rents, increased demand and improving confidence are drawing buyers to the market.
National Housing & Economic Forecast For 2012-2013
Smart money, largely from investors responding to low home prices and rising rents, are chasing real estate, leading analysts to forecast a potential surge once the broad perception of home ownership changes to that of an appreciating asset. The first two quarters of 2012 were the strongest in five years and pending contracts are pointing to a strong second half of the year.
Existing home sales, which were over 7 million a year before the Great Recession have remained at about the 4 million mark since 2008. Economists forecast 4.6 million in existing home sales in 2012, up strongly from 4.26 million last year. Additional improvements are expected in 2013 with sales rising to the range of 4.7 to 4.8 million on an annualized basis.
Mortgage interest rates are projected to rise gradually over the next two-years to an average of 4.4% in 2013 -still historically favorable. The pressure of rising rents on consumer inflation could force the Federal Reserve to raise interest rates in 2013, which might be good for home sales. Refinancing would fall and bank staff would be able to focus more on mortgage origination for home purchases.
Inflation currently remains under control with the Consumer Price Index expected to rise to 2.5% this year and 2.8% in 2013. Falling commodities prices have provided some relieve on inflationary pressures, however rise rent is forcing up core-inflation. Analysts expect Gross Domestic Product to grow 2.4% this year and 2.9%. in 2013, close to the long-term historical GDP average of 3.0%annually.
The unemployment rated spike up a notch to 8.3% at mid-year because of lackluster job creation. Estimates predict it will remain at or near 8% for most of 2012, even with 1.5 million net new jobs (revised down from 2.2 million) because labor force participation will slightly edge up. Net new jobs are forecast at 2.5 million for 2013 bringing the expected unemployment rate to approximately 7.5%.
Housing starts, which have been well below the long-term average of about 1.5 million, are expected to rise to 770,000 this year from 610,000 in 2011, and to continue growing to over 1 million units in 2013. New single family home sales are seen at 400,000 this year, up from a record low 306,000 in 2011, and rising to 530,000 in 2013. With a growing population, we could see housing shortages in 2014 or 2015 if builders do not increase production.
A sustained decline in housing inventory -both for listed homes and shadow inventory of those with seriously delinquent mortgages -is the biggest factor affecting home prices, with broadly balanced conditions developing in much of the country. Bottom line: The median existing-home price will significantly to improve this year and even more so in 2013.