Rising rates and home prices forecast for 2014

by MPA07 Jan 2014
Climbing rates and rising home prices are likely on the menu for 2014.

Standard & Poor’s expects a 6% increase in the S&P Case-Shiller Home Price Index in 2014, according to a report released Monday by S&P.

“While historical annual increases are more in the 4%-5% range, a continued rebound in prices from the 35% trough in 2012 is well complemented with an outlook for positive economic momentum in 2014,” S&P stated.

However, the mortgage industry will see the effects of new mortgage regulations, as well as continued discussion of housing finance reform and the taper of the Federal Reserve’s bond-buying program.

“While the growth in home prices looks good for 2014, mortgage financing availability and the number of new applications remain key components for demand in the new year,” S&P stated. “Even as building permits and new starts continue to grow, the availability of financing remains the lynchpin as we hover around a 64% home-ownership rate.

S&P expects adjustable-rate mortgages to gain popularity in 2014. The company also expects the 30-year fixed-rate mortgage to increase to an average of 4.6%.


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