- An increase in millennial homebuyers, more household formations and job growth are expected to contribute to a “slight increase” in existing home sales in 2017, according to the National Association of Realtors
- Sales of previously owned (or existing) homes in 2016 should turn in the best year since 2006, closing this year at an annual pace of 5.36 million. Sales in the category are forecast to grow 2% to 5.46 million in 2017.
- The median existing-home price is expected to increase 4% in 2016 and 2017.
Low mortgage rates and steady job growth drove demand for existing homes in 2016, but tight inventory in the category pushed prices up, preventing some would-be homebuyers from entering the market, according to NAR Chief Economist Lawrence Yun. Meanwhile, lot and labor shortages persist.
Yun expects inventory conditions to loosen and, as a result, prices to soften in the year ahead. Housing starts forecasts are optimistic, too, and taken together, those factors should see younger, first-time buyers entering the market.
In its 2016 Profile of Home Buyers and Sellers, the NAR noted that first-time buyers, along with single women, experienced a noticeable uptick in homebuying activity. First timers accounted for 35% of sales in 2015, up from 32% in 2015, but still off their prerecession mark of roughly 40%.
Although first-time buyers are coming out in greater numbers than in recent years, they’re doing so later than ever. The NAR reported that the median age of first-time buyers is a record-high 32, on par with 2006 and suggesting that this group weathered the recession and recovery by delaying life events. Student loan debt is also keeping many would-be buyers out of the market. A June NAR report found that for seven in 10 potential homebuyers, the financial burden of paying down that debt was keeping them from buying a home.
Lenders are exploring options for would-be homeowners who say student debt is keeping them from being able to save up enough for a down payment. Last week, SoFi Lending Corp. and Fannie Mae teamed up to announce a program allowing homebuyers to combine mortgage and student loan debt and pay both off in a single series of payments.
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