Saturday, June 21, 2014

Rising Home Prices Slow to Stabilize Economy


While home prices continue to go up, the increase has been more moderate in 2014 than what was seen in the last half of 2013. However, because of tight inventory, prices are continuing to rise in certain areas at an unhealthy rate. This is according to a report that was released by the National Association of Realtors.

Rising Prices

While sellers may be excited about home prices rising, it is much better for the economy if the growth is slow and steady. The median price rose 8.6 percent in the first quarter from a year ago for single-family homes. That increase is less than the 10.1 percent seen in the fourth quarter of 2013.

The change is good news for analysts watching the market. A more normal level of price increases is needed to preserve housing affordability, especially for first-time buyers that make up a large portion of the market. However, more new construction is needed to increase inventory and maintain the housing market. An increase in new housing will help alleviate issues with inventory.

Dropping Inventory

Existing home sales fell in the first quarter by 6.6 percent from the previous year. The supply of inventory is at five months with 1.99 million homes, which is higher than the previous year.

Things may change as more sellers list their homes. Fannie Mae released a survey saying that 40% of Americans feel that selling now is a good idea. Larger cities like Sacramento have been replenishing inventory. Other metro areas are also seeing an improved selection of homes on the market. This is good news for those selling their homes as well as those who have had negative equity in their homes.

The change in numbers is good for buyers and sellers alike. While growth is a good thing, it is only beneficial when it can be sustained. As more statistics move towards realistic numbers, buyers and sellers can have hope for the housing market in the coming months.

If you have decided that now is a good time for you to buy, give me a call. I can help you find the right home in the area of your choice. Contact me today to see what is available in your desired location and price range.

No comments:

Post a Comment