Rising home prices
Home sales slowed toward the end of summer. Normally, you would think that if fewer people are buying homes, then prices wouldn't increase very much. But home prices went up 5.1% in August compared with 12 months earlier, more than double the overall inflation rate.
Home sales "inched backwards because inventory isn't picking up to tame price growth and replace what's being quickly sold," says Lawrence Yun, chief economist for the National Association of Realtors.
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Yun says that, without more new construction, the housing recovery could stall. The signs are ominous this autumn: "There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers," Yun says. He adds that in many areas outside of the Northeast, "prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages, or disheartened by the competition for the minuscule number of affordable listings."
More: Why we need twice as many new houses.