The forecast is based on steady improvements in the US economy, sustained job growth, as well as increased confidence among consumers that now is a good time to buy a home. However, the continuing inventory shortage and potential tax reform could restrict what should be stronger activity.
For 2017, Yun expects existing-home sales to total 5.47 million. The estimate represents the highest pace since 2006, which recorded 6.47 million sales, but is only a slight increase of 0.4% from the pace of 5.45 million in 2016.
"Despite considerable demand all year, pending sales have lost a step in recent months because low supply is pushing prices higher and making home buying less affordable in several parts of the country," Yun said during remarks at the 2017 Realtors Conference & Expo.
Yun said the supply shortage in relation to overall demand is the biggest impediment to sales for this year and into 2018. Affordability continues to be challenged by the slow pace of new-home construction along with more homeowners who stay put for longer before selling.
"The lack of inventory has pushed up home prices by 48% from the low point in 2011, while wage growth over the same period has been only 15%," Yun said. "Despite improving confidence this year from renters that now is a good time to buy a home, the inability for them to do so is causing them to miss out on the significant wealth gains that homeowners have benefitted from through rising home values."
Yun expects single-family housing starts to total 950,000 in 2018, representing an increase of 9.4%. New single-family home sales are likely to total 606,000 in 2017 and increase to around 690,000 in 2018.
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Sales of existing homes should grow 3.7% in 2018 to 5.67 million homes, according to National Association of Realtors (NAR) Chief Economist Lawrence Yun.