“Consumer confidence has fallen and with lower rates and higher price gains, you’d think people would come out in droves to purchase homes,” Don Ruter, a loan originator with American Mortgage and Equity Consultants, told Mortgage Professional America. “But there are supply issues and there are people who want to buy but they’re having difficulty finding suitable properties.”
Indeed. Existing home sales were almost stagnant in January, increasing 0.4% year-over-year, according to the National Association or Realtors. Still, sales were 11% higher than a year ago.
Prices, meanwhile, were up 8.2% year-over-year, jumping to $213,800 in January 2016 from $197,600.
And those rising home prices are a double-edged sword, according to Ruter.
“Wages haven’t risen in line with rising house prices,” Ruter said, noting there are also supply issues plaguing the market. “When it gets closer to spring owners may be more enticed to list their homes. That will hopefully mean there is more to offer in the market.”
That’s an assessment shared by the National Association of Realtors.
"The spring buying season is right around the corner and current supply levels aren't even close to what's needed to accommodate the subsequent growth in housing demand," says Yun. "Home prices ascending near or above double-digit appreciation aren't healthy – especially considering the fact that household income and wages are barely rising."
Rising home prices certainly signal the recovery of the housing market, but it’s not all positive for originators, according to one veteran.