Tonawanda News — “It’s the demographics that make a strong housing recovery pretty much a sure thing,” said Patrick Newport, a housing economist at HIS Global Insight.
Newport expects sales will rise 10 percent this year to 5.14 million. After that, he predicts an 8 percent gain next year to roughly 5.55 million and a 4.5 percent rise in 2015 to 5.8 million. All are relatively healthy levels.
The last time sales exceeded 5 million was in 2007, when the housing bubble burst. From 2008 through 2012, sales averaged 4.3 million a year.
The average rate on a 30-year fixed loan this week was 4.22 percent, according to Freddie Mac. That’s above the average of 3.35 percent reached in May. But it’s far below the average rate of 7 percent since 1985, according to Bankrate.com data.
Rates tend to rise when the economy is strengthening. More jobs and better pay would likely boost home sales.
Still, the increase in rates has added thousands of dollars to the cost of a financing a home. That’s happened at a time when wages have barely kept pace with inflation and unemployment is a still-high 7.3 percent.
And there’s some concern that the government shutdown could delay the processing of some home loans, particularly those backed by the Federal Housing Administration.
Buyers who could get loans in June and July moved swiftly to lock in the lower rates. Completed sales of previously occupied homes rose in August to a six-year high, according to the National Association of Realtors.
But fewer Americans signed contracts to buy homes in August. It typically takes a month or two for buyers to close on a house after locking in rates and signing a contract. Some analysts predict sales are cooling off this fall.
“I am concerned because prices are rising and higher rates squeeze your limits,” said Brian Guzman, a broker at Coldwell Banker in Chicago who mostly caters to first-time buyers.