“We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014,” NAR chief economist Lawrence Yun said in a statement.
New-home sales were close to a five-year high in November as builders responded to pent-up demand unleashed by employment gains and record stock prices.
The S&P/Case-Shiller national home-price gauge rose 11.2% in the third quarter from the same period in 2012, the biggest year-over-year advance since the first three months of 2006. Its index of property prices in 20 U.S. cities, set for release tomorrow, probably increased 13.5% in October from a year earlier, according to a Bloomberg survey.
Higher mortgage rates are also reducing affordability. The average rate for a 30-year, fixed mortgage was 4.48% in the week ended Dec. 26, up from 3.35% a year earlier. In August, the rate reached a two-year high of 4.58%.
After two years of rapid-fire growth, the housing market shows signs of returning to normal, said Budge Huskey, president and chief executive officer of Coldwell Banker LLC, a real estate services firm in Madison, New Jersey.
“We’ve been picking up slack, that’s why the pace has been so torrid,” Huskey said in an interview. “Going forward, when we start to take a look at year-over-year gains and activity, it’s going to appear far more boring, which is not a bad thing.”
Investors and speculators who contributed to the run-up in property values in recent years are becoming a less-important factor in the market, Huskey said.
“We’re getting on the right track,” he said. “We’re now getting to a real estate environment that’s more about the fundamentals and less about these external factors that are artificially shaping the recovery.”