Housing market on track for more improvement this year

The housing market is expected to continue on its road to recovery this year amid stronger jobs and economic growth as well as increasing home prices. 

The National Association of Realtors (NAR) said Wednesday those factors should contribute to boosting existing-home sales 7.4 percent this year. 

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Meanwhile, median home prices are expected to rise about 4 percent, while new homes sales are slated to jump 37 percent and rents are likely to increase 4 percent, according to the new forecast.

NAR predicts that economic growth will pop up to a 3.1 percent annual pace while housing starts will rise 23.3 percent this year. 

Despite the solid forecast, the market still must clear some hurdles.

NAR chief economist Lawrence Yun said an expected rise in interest rates, stifled lending and tough conditions for first-time home buyers could hamper the market's overall growth. 

"Home prices have risen for the past three years cumulatively about 25 percent, which boosts confidence in the market and traditionally gives current homeowners the ability to use their equity buildup as a downpayment toward their next home purchase,” Yun said.

"Furthermore, first-time buyers are expected to slowly return as the economy improves and new mortgage products are made available in the marketplace with low downpayments and private mortgage insurance."

After a long stretch of double-digit increases, prices gains have moderated in the past few months. 

A Corelogic report on Monday showed that prices increased 5.5 percent in November compared with 12 months earlier.

Home prices are still 12.9 percent below their April 2006 peak.

For 2014, Yun expects total existing-homes sales to finish the year around 4.94 million, which is down 3 percent from 2013, but then rise to 5.30 million this year.

The median existing-home price for last year should come in around $208,000, up 5.6 percent from 2013.