Thursday
October 30, 2014

Housing Market Reaching Equilibrium

|
-A A +A

Housing Market Reaching Equilibrium

Home prices have already begun moderating over the past year and appreciation likely will continue to gradually slow over the next two years, according to a forecast of 31 analysts recently surveyed by Reuters. Analysts predict home prices to rise 7.5 percent this year and then curtail to 4 percent by 2016. 

That marks a sharp slowdown from the double-digit increases reported last year. Analysts surveyed by Reuters say they expect prices to slow in the coming months due to tight lending standards, slow wage growth, and a lack of first-time buyers. 

"Growth would be more robust if we saw more first-time homebuyers in the market," says David Nice, economist at Mesirow Financial. "That would put the housing market on a sustainable growth trajectory."

Analysts surveyed expect existing home sales to reach a 4.75 million annual rate in the second quarter of this year and rise to 5.10 million in the first quarter of 2015. 

"We are seeing a state of equilibrium," says Mark Goldman, a real estate expert at San Diego State University in California. "I don't see any symptoms that would cause housing prices to go up or down significantly."

Source: “U.S. House Price Gains Seen Moderating Over Next Few Years: Poll,” Reuters (May 30, 2014)

Read more

Are Home Prices Rising Too Fast?