January home sales dropped by 4.9 percent since December as prices rose by 6.2 percent over the past year. The price increase is likely due to a decline in the number of homes available for sale. Rapid price hikes are currently outstripping wage growth and disadvantaging young and first-time home buyers. The price increase is good news for home owners.
“We’re starting to see big concerns about pricing and affordability. Folks are finding out they are priced out of the market.” said Jacob Oubina, a senior economist at RBC Capital Markets LLC in New York.
Despite the unexpected drop in sales, better employment, low mortgage rates, and high rents will likely keep demand high, meaning sales will likely pick up later in the year. Estimates from the National Association of Realtors predict 5.3 million existing homes will be sold in 2015, a 7 percent increase from 2014.
“All the factors that would push up home sales are moving positively,” said Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors.
Read More – Home Sales Drop as Lack of Supply Drives Prices Higher: Economy (Bloomberg Business)