Existing-home prices rose 5 percent year-over-year in 2015 and 7 percent in 2016, but according to the National Association of Realtors, prices are only slated to increase 4 percent in 2017.
CBS News reports that higher mortgage rates and increased home building activity will slow price acceleration. The 30-year fixed mortgage reached 4.33 percent last week. As rates get higher, buyers will look for cheaper homes.
Meanwhile, there’s a shortage of available homes due to below-normal levels of building and an increasing number of homes bought by investors and turned into rentals. In December, the inventory of existing homes fell to a low of 1.65 million, which translates to a 3.6-month supply (a 6-month supply is the benchmark of a healthy market).
NAR chief economist Lawrence Yun said home building is picking up. It still isn’t enough to meet demand, though, some home values will rise in 2017.
Some markets will fare better than others. Florida, where job growth has kicked into high gear, and parts of the Rocky Mountain states -- including Denver, Salt Lake City and Boise, Idaho -- are likely to outperform the rest of the country in terms of home-price appreciation, according to Yun. … In New England, the outlook isn’t nearly as rosy. While Boston’s housing market is expected to remain robust this year, other parts of the region, including Connecticut and Vermont, are likely to see sluggish increases in home prices owing to relatively slow job growth and plentiful housing inventory, said Yun.