October 21st, 2013
A recent report from the National Association of Realtors revealed that sales of existing homes were down in September throughout the country, but this statistic isn’t necessarily bad news for the housing market. Existing-home sales fell 1.9 percent last month to a seasonally adjusted rate of 5.29 million, USA Today reported.
Despite this slight drop in sales, economists are confident the market will remain strong. In fact, a new study from the San Francisco Federal Reserve Bank, published Oct. 21, determined that home sales will increase if housing prices continue their upward trend, Reuters reported.
The study’s authors theorize that homeowners are currently on the fence with regard to putting their houses up for sale because they are waiting for an opportunity to score a higher price. Thus, if prices keep growing as they have been for months, there could soon be more properties on the market, providing more supply for potential buyers.
“If [homeowners] observe prices going up, they may want to wait and gamble that the increases will continue, allowing them to sell later at a higher price,” William Hedberg and John Krainer, researchers at the San Francisco Federal Reserve, wrote in the bank’s latest Economic Letter. “In the longer run, the link between the level of house prices and for-sale inventories is strong. If prices continue to rise, inventories for sale should eventually rise too.”