If you’re thinking about buying or selling a home in 2015, it would help to have a crystal ball to make housing market predictions for the coming year. But because housing market crystal balls do not exist, we have to take our hints from current trends to understand what might happen in the coming year.
Home sales expected to gain momentum
On the national level, existing home sales are expected to improve over the number of sales in 2014. The increase is expected to benefit both buyers and sellers, according to Lawrence Yun, chief economist for the National Association of Realtors (NAR).
Yun notes this year got a sluggish start, but 2014 gained some momentum as more inventory became available, prices eased up and pent-up demand spilled forth. The improving job market is also contributing to the trend back toward a healthier market.
The NAR expects the year to end at about 4.9 million existing houses sold. They expect 2015 to end with about 5.3 million existing houses sold. As far as home prices go, Yun believes the national median price will creep up about 4 percent in 2015.
While the housing market is expected to improve next year, there are still roadblocks keeping the industry from a full recovery. Some parts of the country are still experiencing limited inventory, which puts a hamper on regional sales. Tighter lending restrictions could also play a role in slowing down sales.
Interest rates projected to go up and foreclosures down
When it comes to mortgage rates, many industry experts expect the 30-year, fixed-rate mortgage interest rate to hover in the 5 percent range by the end of 2014 into the start of the new year. Earlier this year, the Mortgage Bankers Association (MBA) predicted that rates will hit 5.3 percent by the end of 2015.
On the foreclosures front, the MBA reports that the number of loans in foreclosure is going down — another sign of a recovering economy.
“Delinquency rates and the percentage of loans in foreclosure fell to their lowest levels since 2007,” notes Mike Fratantoni, MBA’s chief economist. “We are now back to pre-crisis levels for most measures.”
The rate for serious delinquent loans (those that are more than 90 days late or are in foreclosure) is down, and the bulk of those are loans originated in 2007 or earlier — prior to the economic and housing downturn. Loans made more recently are performing well due to tighter credit requirements and a recovering economy.
Thinking about buying?
If you’re pondering buying in 2015, think about the housing market predictions. It will be a great time to take advantage of still-low interest rates. Get your finances in order, check on your credit reports for accuracy and get prequalified for a loan. That way you’ll know the price range of homes you should be targeting, and you’ll have an advantage when you make an offer for a home because you’ll have guaranteed funding.
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