What’s Holding Potential Home Sellers Back?

The National Association of REALTORS® recently reported that existing-home sales increased 4.7 percent in February compared to a year ago.

But with an improving labor market, home sales should be even higher, says Mark Fleming, chief economist at First American Financial Corp. Home prices are higher too, which often correlates with rising home sales, according to Fleming’s research.

“Rising prices only crimp affordability for the first-time buyer who doesn’t yet own the asset,” Fleming told The New York Times. “But the vast majority of home sales are to existing home owners. And for existing home owners, what changes affordability is their own income and the price of money.”

The equity picture has shown much improvement recently. CoreLogic reported earlier this month that89 percent – or about 44.5 million — of all U.S. properties with a mortgage had equity by the end of the fourth quarter of 2014.

Source: “Negative Equity a Drag on Home Sales,” The New York Times 3/ 27/15 and “89% of U.S. Homes Ended 2014 With Equity,” REALTOR® Magazine 3/18/15