WASHINGTON — The U.S. housing market has sizzled this summer, lifting expectations that home sales will finally help drive an economic expansion now in its seventh year.
Or will it?
Signs are emerging that housing’s momentum may be destined to falter in coming months. Analysts note that some of the key foundations needed to sustain a brisk pace of home-buying in the long run appear to be missing.
The U.S. economy had only just begun to derive strength from housing for the first time since the recession began in 2007. If home sales flag, that strength would fizzle.
The main problem is also the simplest: There just aren’t enough homes available. Robust demand has failed to draw many sellers into the market. And few in the industry foresee a flurry of home listings arriving soon.
Other pressures will also likely slow sales. Steadily rising home prices can put ownership out of reach for some. What’s more, builders are increasingly focused on apartment construction rather than single-family homes.
And then there are mortgage rates, which have crept up from recent lows and made it incrementally harder for some would-be buyers already struggling to afford a purchase. Some buyers are rushing to finalize deals for fear that rates will keep rising — a trend that could depress demand later this year.
“What we fear is next is if interest rates rise and prices rise,” said Deborah Heffernan, a Boston-area broker. “That combination will definitely eliminate people from the market.”
Early this spring, buyers leapt back into the market. Mortgage rates were just slightly above their 2012 lows, and nearly two years of solid job growth had generated millions of new paychecks.
Sales of existing homes have surged 9.6 percent in the past 12 months, according to the National Association of Realtors. In June, they hit an annual rate of 5.49 million, a pace last achieved before the recession began. And sales of new homes have jumped 21 percent through the first half of 2015, the government reported Friday.
But an unusual trend has taken hold: Stronger home sales have yet to motivate many people to put their homes on the market. Listings for existing homes have barely edged up in the past year. And the pace of home building remains subpar compared with previous economic expansions.