Home prices are rising, and so are mortgage rates | South Salem NY Homes

 

 

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Home prices are rising, and so are mortgage rates, making it tough for would-be buyers, particularly first-time purchasers, to close a deal on a new place. Meanwhile, the looming threats of new mortgage rules and pending housing-finance reform are adding uncertainty to the market.
             

Despite these challenges, economists say home sales will continue to grow next year. Why? Hiring in 2014 may be strong enough to unleash a chunk of the pent-up demand that built up during the recession.
              

“It’s almost going to be like a tug of war next year. You have what appears to be a recovering economy, but at the same time you have the prospect of higher interest rates,” said Nicolas Retsinas, senior lecturer in real estate at Harvard Business School. “Generally, when there is a tug of war between jobs and interest rates, jobs win.”
             

In addition, there’s evidence that purchasers are becoming used to the pricier sales environment, with recent data showing that sales of new single-family homes are close to the fastest pace since 2008. And while sales of existing homes slipped recently, they are expected to increase next year as inventories rise.
             

However, not all home sales will perform equally in 2014, according to forecasts. Sales of new homes are expected to rise faster than sales of existing homes, which make up a larger share of the market.
              

According to the National Association of Home Builders, a trade association, sales of new single-family homes are expected to hit 607,000 in 2014, compared with an annualized rate of 464,000 in November. If sales of new single-family homes rise above 600,000 next year, the rate would remain below an average of more than 1 million over the five years leading up to a 2005 peak, government data show.