Last year, home sales were stronger than they’ve been in a long time. After years of volatility and gradual gains, the buyer boom was a welcome relief. However, the return of buyer demand created a new concern for housing. As more prospective buyers entered the market, there were fewer homes available for them to choose from. This caused home prices to rise. Now – though the housing market remains strong at a time when global economic uncertainty has slowed the U.S. economy – analysts and industry experts are keeping an eye on housing affordability and what affect it may have on sales in 2016. Sean Becketti, Freddie Mac’s chief economist, says the issue isn’t going to be resolved quickly. “Housing was one of the few bright spots in the economy last year, and we expect continued improvement in 2016,” Becketti says. “The imbalance between demand for housing and the supply of both houses and apartments has supported rapid growth in both house prices and rents. The gap between demand and supply will not be closed any time soon, thus we project continued house price appreciation in 2016.” In short, how quickly that gap is closed will be determined by how quickly new homes are being built and put up for sale in any particular area. Though rising equity will lead to more homeowners putting their homes up for sale, new home construction is the real key to balancing the market and stopping affordability from becoming a bigger issue – which is why home buyers would be wise to keep an eye on the new home market. More here.
