NAR Forcasts improving market for housing.

This is a repost from PAR Just Listed, blog of the PA Association of Realtors.

The housing recovery is expected to remain strong in the new year, driven by economic growth and continued job creation, according to Lawrence Yun, the National Association of Realtors®’ chief economist.

The housing recovery is expected to continue on its path in the new year with home prices continuing to rise; sales to rise slightly; and the foreclosure crisis expected to finally draw to an end.

“For the general consumer, the market will be good in 2014,” said Yun. “Home values will continue to rise, but not sharply, but there won’t be a decline.”

This year has marked the second straight one of a “very respectable recovery,” said Yun, with a 20 percent cumulative increase in existing-home sales over the past two years and nearly a 20 percent rise in home prices. However, he notes that existing-home sales will likely plateau in 2014.

Home prices, which rose 11 percent in 2013, will grow at a slower pace of five percent in 2014, Yun estimates.

He attributes the expected slowdown in the home-price rise to “less affordable conditions from higher prices and higher mortgage rates.”

The Federal Reserve last week said it would in January start tapering economic stimulus that has helped keep interest rates low. But it included language about keeping its target range for the federal funds rate, giving hope that mortgage rates won’t head far north.

Yun sees the 30-year fixed rate mortgage rate going above five percent by the second half of 2014, up from an average 4.26 percent in November and 4.47 percent last week. That will hurt affordability, Yun says.

While rising interest rates will have a negative impact on the housing market, continued job creation will have a positive influence, says Yun. He estimates two million or more jobs will be created in 2014.

About Diana Dietz, e-PRO: Diana Dietz is the Communications Manager at the Pennsylvania Association of Realtors®. Follow Diana on Twitter.

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