Record-low interest rates fueled a recovery in the housing market that spread to the broader economy. With mortgage interest rates rising in recent months, the outlook has become less certain.
The Fed signals that it may begin to tap the asset purchases has led to an increase in the 30-year fixed-rate mortgage to more than 4 percent in recent weeks, having hovered in the 3 percent range for months.
At the National Association of Realtors, which releases the figures on sales of previously owned homes, spokesman Walter Molony says, "It looks like most of the growth in sales has already taken place this year. Higher mortgage interest rates are now causing home sales to level out."
Molony says the trade group expects sales to rise between 2 percent to 3 percent in 2014, with an increase in home prices of up to 6 percent. That's compared to what he characterizes as an 11 percent gain for this year.
Source: Bankrate
The Fed signals that it may begin to tap the asset purchases has led to an increase in the 30-year fixed-rate mortgage to more than 4 percent in recent weeks, having hovered in the 3 percent range for months.
At the National Association of Realtors, which releases the figures on sales of previously owned homes, spokesman Walter Molony says, "It looks like most of the growth in sales has already taken place this year. Higher mortgage interest rates are now causing home sales to level out."
Molony says the trade group expects sales to rise between 2 percent to 3 percent in 2014, with an increase in home prices of up to 6 percent. That's compared to what he characterizes as an 11 percent gain for this year.
Economist Robert Brusca notes that there's been a significant recovery from the depths of the housing market collapse. "Both new and existing home sales have been rising strongly in this recovery after a slow start," Brusca says. "Existing sales are up some 47 percent from their low point, while new home sales are up some 84 percent from their low. From those reference points, median existing home prices have risen 17 percent, with new home prices up 13 percent."
At the same time, he's sees some signs that are worrisome. "For low-priced houses ($100,000 and lower), existing home prices are still lower year-over-year by nearly double digits. New homebuilding is cherry-picking the hottest regions and is not representative of the (U.S.) housing market." Homebuilder stocks have recently been declining amid lower expectations.
As for helping to spread the wealth, so to speak, to the broader economy, Brusca says, "It is not surprising that sales of items that relate to homebuying -- like appliances, furniture and building materials -- are lagging."
Source: Bankrate
