WASHINGTON — Entering the 2014 spring buying season, the U.S. housing market faces an unusual dilemma: Too few people are selling homes. Yet too few buyers can afford the homes that are for sale.
"Both sides of the equation are in a funk," said Glenn Kelman, CEO of the real estate brokerage Redfin.
A 13.4 percent jump in the average price of a home sold last year, according to the Standard & Poor's/Case-Shiller 20-city index, hasn't managed to coax more homeowners to sell.
Average prices nationally are expected to rise by single digits this year. The gains could be strongest in areas such as Seattle and Austin, Texas.
After last year's growth spurt, the housing recovery may have begun. Here are five vital signs that will shape home sales this spring and the rest of the year:
• Warmer weather, job growth and a strengthening economy are expected to encourage more listings this spring.
• Sales of existing homes are projected to hit 5 million this year, according to the National Association of Realtors, far below the 5.5 million associated with healthy markets. Why? Too few first-time buyers. They bought about 1.5 million homes last year, about 500,000 fewer on average than they would have typically.
• Something close to subprime borrowing has just started a comeback. Wells Fargo is now offering mortgages to subprime borrowers with credit scores as low as 600. Carrington dropped its minimum credit score to 550.
• Investors bought roughly one in every five homes sold last year, according to the National Association of Realtors. The investors' properties became rehab projects or rentals. Investors, however, are expected to play a lesser role this year.
• Sales of homes worth more than $1 million rose 14.4 percent over the past 12 months, according to Bank of America Merrill Lynch. By contrast, sales of properties valued at less than $100,000 dropped 18 percent. A key reason: Fewer foreclosed homes are being listed.