The National Association of Realtors expects existing homes sales will be 3.3 percent higher in 2016, compared to 2015, and come in at 5.42 million units. If this prediction holds true, it would be the best year in home sales since 2006 (6.47 million).
On the flip side, the NAR predicts home sales will rise just 2 percent to 5.52 million units in 2017, weighed down by increasing mortgage rates and declining consumer confidence, among other factors.
In the NAR's fourth-quarter Housing Opportunities and Market Experience (HOME) survey, respondents were asked about their confidence in the U.S. economy and their housing expectations in 2017. While most households said they believe now is a good time to buy a home, the confidence level dropped significantly among renters.
Fifty-seven percent of renters responded positively; down from 60 percent in September and 68 percent a year ago. Seventy-eight percent of homeowners said they think now is a good time to buy, representing no change from September, but a drop from 82 percent in December 2015.
Declining affordability is the main reason for the lackluster HOME survey result.
"Rents and home prices outpacing incomes and scant supply in the affordable price range has been a prominent headwind for many prospective buyers this year," said Lawrence Yun, chief economist for the NAR. "Making matters worse, the unwelcoming reality of higher mortgage rates since the election is likely further holding back confidence."