LOS ANGELES — After distressed sales lost their hold on much of California’s market, the state’s housing market will continue to improve in 2014, with sales shifting toward primary home buyers and both sales and home prices posting further gains, according to the California Association of Realtors’ 2014 California Housing Market Forecast.
The CAR forecast sees sales gaining 3.2 percent next year to reach 444,000 units, up from the projected 2013 sales figure of 430,300 homes sold. Sales in 2013 will be down 2.1 percent from the 439,400 existing, single-family homes sold in 2012.
“The housing market has improved over the past year, and we expect this trend to continue into 2014,” said CAR President Don Faught. “As the economy enters the fourth year of a modest recovery, we expect to see a strong demand for homeownership, as buyers who may have been competing with investors and facing an extreme shortage of available housing return from the sidelines.”
CAR’s forecast projects growth in the U.S. Gross Domestic Product of 2.8 percent in 2014, after a projected gain of 1.8 percent in 2013. With nonfarm job growth of 1.9 percent in California, the state’s unemployment rate should decrease to 8.3 percent in 2014 from 9 percent in 2013 and 10.5 percent in 2012.
The average for 30-year fixed mortgage interest rates will rise to 5.3 percent but will still remain at historically low levels.
The California median home price is forecast to increase 6 percent to $432,800 in 2014, following a projected 28 percent increase in 2013 to $408,600.
“We’ve seen a marked improvement in housing market conditions in a year with the distressed market shrinking from one in three sales a year ago to less than one in five in recent months, thanks primarily to sharp gains in home prices,” said CAR Vice President and Chief Economist Leslie Appleton-Young. “As the market continues to improve, more previously underwater homeowners will look toward selling, making housing inventory less scarce in 2014. As a result of these factors, we’ll see home price increases moderate from the double-digit increases we saw for much of this year to mid-single digits in most of the state.”