1 December 2017
Inventory constraints that have fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market will begin to ease next year as part of broad and continued market improvements, according to the recently released realtor.com® 2018 National Housing Forecast.
The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is being predicted based on developments first detected by realtor.com® late this summer. The annual forecast, which is among the industry’s bellwethers in tracking and analyzing major trends in the housing market, also foresees an increase in millennial mortgages and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of tax reform legislation currently being debated in Congress.
“Next year will set the stage for a significant inflection point in the housing shortage,” says Javier Vivas, director of economic research for realtor.com®. “Inventory increases will be felt in higher priced segments after the spring home-buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond.”
Realtor.com® Forecast for Key Housing Indicators
|Housing Indicator||Realtor.com® 2018 Forecast|
|Home price appreciation||3.2% increase, enabling a sales pick-up|
|Mortgage rate||Average 4.6% throughout the year and reach 5% (30-year fixed) by the end|
|Existing-home sales||2.5% growth, low inventory trend starts to reverse|
|Housing starts||3% growth in home starts; 7% growth in single-family home starts|
|New-home sales||Increase 7%|
|Homeownership rate||Stabilize at 63.9% after bottom in Q2-2016|
5 Housing Trends for 2018
Next year, home prices are anticipated to increase 3.2 percent year-over-year after finishing 2017 up 5.5 percent year-over-year. Existing-home sales are forecast to increase 2.5 percent to 5.60 million homes due in-part to inventory increases, compared to 2017’s 0.4 percent increase or 5.47 million homes. Mortgage rates are expected to reach 5 percent by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization in the year ahead.
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