“Prices are increasing faster than we expected them to because of the continual shortage of new homes coming onto the market,” says Senior Economist Joseph Kirchner of realtor.com. “People that had been holding back on buying a home … now have good, steady jobs and are less worried about losing their jobs and hence are going into the housing market.” If the shortage of homes continues, prices could rise 7% to 8% year over year in 2017, he says. Ouch.
That means buyers on a budget “will be able to afford one less bedroom [or need to] accept a house with a longer commute,” Kirchner says.
The first quarter of the year marked the strongest quarterly sales pace in a decade, according to the report. “Prospective buyers poured into the market,” NAR’s Chief Economist Lawrence Yun said in a statement. “Those able to successfully buy most likely had to outbid others—especially for those in the starter-home market.” Read more.