The housing market improved slightly in November. The Pending Home Sales Index rose 0.8 percent to 104.8. This is 4.1 percent above November 2013, marking the third consecutive month the index has posted year-over-year gains. Every region of the country saw improvements but the Midwest. Sales in the Midwest decreased 0.4 percent, which is 0.5 percent below last year’s sales. In the North, sales climbed 1.4 percent, 7.0 percent above November 2013. The index also posted monthly gains of 1.3 percent and 0.4 percent in the South and West, respectively. Year-over-year sales in the South are up 5.1 percent, and sales in the West increased 4.9 percent. National home sales for 2014 should hit 4.94 million, a 3.0 percent drop from 2013.

Low Down Payments
Many buyers believe they need a significant down payment to purchase a new home. The National Association of Realtors' 2014 Profile of Home Buyers and Sellers proves otherwise. For first-time buyers, the median down payment averaged six percent, while repeat buyers had a median down payment of 13 percent.

Sales Expected to Increase
The next twelve months should make up for 2014's drop in sales. The expanding economy and improving job market should lead to an increase in the demand for homes. Meanwhile, home prices have risen by an impressive 25 percent over the past three years, giving current homeowners the equity they need to afford their next home purchase. And new mortgage products with incentives like low down payments will draw first-time buyers into the market. With all these factors in play, NAR economists believe sales could climb to 5.30 million by the end of 2015.

Rates Low but Expected to Climb
Sliding bond yields led to a drop in fixed mortgage rates at the start of the New Year. For the week ending January 8, the 30-year fixed-rate mortgage averaged 3.73 percent. This is the lowest rates have fallen since May 23, 2013, when the 30-year fixed averaged 3.59 percent. Despite the decrease, economists still project rising interest rates over the coming months.

Slowing Home Price Growth
Home price growth is expected to slow down over the next twelve months. Two years ago, existing-home prices climbed 11.4 percent. Last year, prices rose 5.6 percent, with the national median existing-home price reaching $208,000. Economists believe the pace for 2015 will be between four and five percent, a more reasonable price growth that makes home ownership more affordable for more Americans.