Higher rates and lower consumer confidence are expected to put a damper on existing home sales in 2017, according to data from the National Association of Realtors.
For 2016, existing home sales are expected to reach 5.42 million for a 3.3% year-over-year increase, according to the latest housing forecast from NAR. In the year ahead, this sales growth is expected to slow to 2%, totaling about 5.52 million.
“Although the economy is expected to continue to expand with around 2 million net new job creations, existing home sales are expected to see little expansion next year because of affordability tensions from rising mortgage rates and prices continuing to outpace income growth,” NAR Chief Economist Lawrence Yun said in a news release Wednesday.
NAR predicts that the median price of existing homes will be $232,400 during the fourth quarter of 2016. That figure is forecast to grow to over $249,000 by the second quarter of next year before retreating to $241,600 by year’s end.
Impressions of the housing market are worsening. Renters in particular have become less optimistic — only 57% of them feel now is a good time to buy, NAR reported based on survey results versus 68% a year ago. Among homeowners, the share who agrees that now is a good time to buy only dipped four percentage points to 78%.
But general attitudes toward the economy seem to be improving. Fifty-four percent of households believed that the economy was improving in the fourth quarter, as compared with 48% in the third quarter.