Us home sales to moderate

Photo credit: Cyndie

US home sales are expected to moderate in 2016 by the National Aassociation of Realtors.

The forecast slowdown arrives after the US housing market's best year in nearly a decade, as pent-up buyer demand faces the headwinds of cooling economic growth and declining affordability.

Job growth and improving inventory conditions are both predicted to continue driving demand and, as a result, sales, but NAR Chief Economist Lawrence Yun highlights the impact that rising mortgage rates will have upon the market, especially as house prices still outpace wages.

"This year the housing market may only squeak out 1 to 3 percent growth in sales because of slower economic expansion and rising mortgage rates," he explaines.

"Furthermore, the continued rise in home prices will occur due to the fact that we will again encounter housing shortages in many markets because of the cumulative effect of homebuilders under-producing for multiple years. Once the spring buying season begins, we'll begin to feel that again."

Indeed, the national median existing-home price for all of 2015 will be close to $221,200, up around 6 per cent from 2014, with price growth forecast to total around 5 per cent in 2016.

Total existing home sales in the US are forecast to finish 2015 6.5 per cent higher than the previous year at a pace of 5.26 million, the highest since 2006 but still 25 per cent below the peak recorded in 2005.