US home sales on track to reach highest pace since 2006 despite market challenges

Taylor Scott International News

Relentless supply constraints and home price growth outpacing wages are testing the patience of home buyers in the United State this year, but existing home sales are still on track to come in at their highest pace since 2006. Monthly existing home sales were uneven in the first quarter but still came in at a seasonally adjusted annual rate slightly higher at 5.29 million than last year’s overall annual pace of 5.26 million, National Association of Realtors chief economist told the 2016 Legislative Meetings and Trade Expo. He pointed out that demand has mostly remained strong, especially in the top job producing metro areas and is being upheld by mortgage rates near three year lows and the 14 million jobs gained since 2010. ‘The housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fuelled by the grossly inadequate number of new single family homes being constructed. Pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer,’ he explained. Yun forecasts existing sales to finish 2016 at a pace of around 5.40 million which would be the best year since 2006 when it was 6.48 million. After rising to 6.8% in 2015, the national median existing home price is forecast slightly moderate to between 4% and 5% this year. Senator Elizabeth Warren told the meeting that college debt is hampering young people from getting on the housing ladder. She explained that seven out of 10 college graduates that need to borrow thousands of dollars to attend college and then spend countless years afterwards repaying the debt at high interest rates. ‘Student debt is crushing young people, it’s hurting the nation's economy and delaying the opportunity for many to buy their first home. Every monthly payment going to reducing their student debt could instead be money going towards saving for a down payment on a house,’ she added. Yun remarked that the ongoing absence of first time buyers is the missing link to a full housing recovery despite it being a time when conditions are ripe for a larger share of them buying homes. ‘Job growth has been strong for multiple years, rents have soared in many areas and mortgage rates are historically low. Unfortunately, a multitude of factors such as increasing home prices amidst flat wage growth, the lack of available starter homes and repaying student loan debt is thwarting many young would be buyers,’ he told the meeting. ‘Spectacularly low mortgage rates mean today’s prospective home buyers are the luckiest in a generation but the unluckiest in actually becoming home owners because of the roadblocks hampering their ability to buy,’ added Yun. Warren urged Congress to pass the Bank on Students Emergency Loan Refinancing Act, which would give a much needed break to student debt… Taylor Scott International

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