National Chief economist Lawerence Yun is predicting existing-home sales will reach 5.6 million units this year, up about 200,000 units from 2016, and new-home sales of 620,000 units, up from 560,000. Steady GDP growth of 2.2 percent, new jobs of 2.1 million, and relatively low inflation of 2.3 percent are behind the gains. “There are no signs of recession” on the horizon, he said.
Home sales would be higher but rapidly rising home prices, fueled by low inventories in markets around the country, are keeping sales constrained, he said. Home prices are expected to rise far ahead of wage gains, exacerbating a mismatch that’s plagued the market since the recovery began. He predicted price gains of 5 percent this year, about the same as last year.
While housing prices have increased – mostly because investors bought up all the foreclosures and are keeping them as rentals. It still makes more sense to own versus rent. If you are worried about a bubble, stop. We have opposite signs for the economy.