Home sales should pick up in the back half of 2014, but first-time home buyers are still underrepresented, the National Association of Realtors reported.
In May, first-time buyers were responsible for 27 percent of existing-home sales. That includes a relative “surge” of first-timers who bought in May so they could take advantage of an expiring tax credit program.
“The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $250,000 are 10 percent behind last year’s pace,” said Lawrence Yun, the association’s chief economist.
“Meanwhile, apartment rents are expected to rise 8 percent cumulatively over the next two years because of tight availability. Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable.”
Overall, pending home sales were up “sharply” in May, and the effect was seen in every region.
“Sales should exceed an annual pace of 5 million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” Yun said. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”
Specifically, Yun is forecasting a 2.8 decrease in sales of existing homes. The median price, however, will grow by 5 to 6 percent.
This article was originally published on Community Investor. The Grace Frank Group claims no ownership of this information.
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