Home prices will continue to rise next year despite higher mortgage rates, says Lawrence Yun, chief economist for the National Association of Realtors.
The average price for previously owned homes is expected to climb 6 percent next year, to about $207,800, Yun said Friday while speaking at the NAR's annual convention in San Francisco. That's somewhat of a slowdown compared to the price increases seen this year. The NAR predicts that home prices will end 2013 about 11 percent higher than last year.
Rates and jobs affect affordability
Rising mortgage rates will have a negative effect on the market next year, but Yun expects job growth will compensate for that. The average rate on the popular 30-year fixed mortgage should reach about 5.3 percent by the end of 2014, the NAR predicts.
"Jobs will be very important in a rising interest rate environment next year," he says.
A shortage of inventory of homes available for sale also will help push prices up, but it will slow the pace of home sales. The volume of existing home sales will be essentially unchanged in 2014, Yun says.
"The decline in inventory this year was a surprise to everyone," he says.
Nationally, median home values rose 12.5 percent in the third quarter of 2013, compared to the same period a year before. See which five metro areas fared best.