WASHINGTON – New economic reports show that a speedier recovery of the housing market does not appear in the cards this year. Housing experts are dialing back rosier projections in favor of another ho-hum year, where home sales are flat and prices climb to make ownership less affordable.
The National Association of Realtors hinted this week that it’ll lower, perhaps as soon as Monday, its forecast for sales of existing homes. The group reported Tuesday that sales dipped 0.2 percent in March to an annualized rate of 4.59 million, with sales of single-family homes dipping 7.3 percent compared with the pace of March 2013.
Wednesday brought similarly weak data on new home sales. Sales of newly built, single-family homes dropped 14.5 percent in March to an adjusted annual rate of 384,000 units, according to data from Department of Housing and Urban Development and the U.S. Census Bureau.
It all adds up to the likelihood of yet another subpar year for the housing sector.
“The [sales] forecast will be coming down, and that is largely due to affordability challenges,” Danielle Hale, director of housing statistics for the Realtors group, said in an interview. “Incomes have not kept pace with the pace of house price increases.”
The weak sales of new and existing homes come even as hiring appears to have moved onto more solid ground in the past six months.
“I’m puzzled by the fact that existing home sales have been so weak,” conceded Patrick Newport, an economist specializing in housing for forecaster IHS Global Insight.
Factors contributing to the sluggish housing market, he said, include a nearly full percentage-point rise on 30-year fixed mortgage rates and an unusually harsh winter. The average rate on a 30-year fixed mortgage is still below 4.5 percent. That’s lower than mortgage rates in the long stretch between 1990 and 2008, when home sales and prices flourished nationally.
But five years since the end of the Great Recession, few Americans can qualify for the historically low mortgage rate. After the near-collapse of the housing market in 2007-2008, lending standards tightened and first-time home buyers with little credit history still struggle to get a loan.