Home Sales On The Rise
Why Home Sales Will Rise This Year
The first quarter ended with decent home sales activity, but the rest of the year should be even better. Here's why.
By Lawrence Yun
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The first quarter ended with decent home sales activity, with existing homes selling at an annualized pace of 5.1 million. The remainder of the year should be better still for the following reasons:
More jobs
Rising stock market wealth
Rising apartment rents
Continuing high affordability conditions
Home values at historically justifiable levels
Investors looking to hedge against inflation
Foreigners buying U.S. homes on the cheap
Other potential contributing factors, although they're not happening yet, are huge bank profits translating into more desire to lend and some reduction to market friction as lenders' short sale approval processes improve and appraisals become less of an issue.
So, if existing-home sales either hold at the 5.1 million pace of the first quarter or improve on that, then the annual sales tally will easily exceed the 4.9 mil-lion home sales we saw last year.
Still, the stars are not all aligned. There will be obstacles. High gas prices are a daily reminder that something is not right with the economy; that will hold back consumer confidence. Washington policymakers are debating the ending of government guaranteed mortgages and requiring a minimum down payment of 10 to 20 percent on conventional mortgages, even though the FHA and VA mortgage programs have very low down payments and have yet to require a single dime of taxpayers' money. And there will be attempts to chip away at the mortgage interest deduction by invoking class warfare-the " let's go after the rich " approach.
At least through 2011, improving market developments should outweigh the negative impact imposed by Washington policymakers.xisting-home Sales ‘Rebenchmarking'
Learn how NAR plans to ensure the continued accuracy of its existing-home sales calculation in the years ahead: "How NAR Calculates Existing-home Sales"
Lawrence Yun is chief economist of the NATIONAL ASSOCIATION OF REALTORS®.