Experts have weighed in with predictions for this year’s housing market. Whether you are a homebuyer, home seller or an industry professional, you’ll want to be up-to-date on the direction that markets may take in the coming months.
Forecasts that look at residential real estate and the mortgage markets on a national level are offering these insights:
1. The supply of single-family homes for sale will reduce.
In 2017, the inventory of homes for sale created bidding wars in some markets and drove home price up. This year the supply of single-family homes may decrease. According to Forbes, “… the general consensus is that inventory will pick up slightly.”1
Bringing more newly-built homes onto the market will optimize 2018. As National Association of Homebuilder’s (NAHB) Chief Economist Robert Dietz recently said, “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year.”2
2. Home prices will continue to climb, having an impact on entry-level home buyers.
In the first week of January, CoreLogic released its monthly Home Price Index Forecast (HPI) that indicated home prices may increase by 4.2 percent on a year-over-year basis from November 2017 to November 2018.
In discussing the report’s conclusions, CoreLogic Chief Economist Dr. Frank Nothaft said,
“Rising home prices are good news for home sellers,but add to the challenges that home buyers face. Growing numbers of first-time buyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for ‘starter’ homes and further erosion of affordability.”3
3. Expect increases in average rate for 30-year fixed rate mortgages.
According to the Mortgage Market Forecast Commentary issued by the Mortgage Bankers Association (MBAA) in late December, Rates on 30-year fixed rate mortgages may increases to 4.5 percent in 2018 from 4.0 percent in 2017. 4 Other experts generally agree, forecasting rates for 2018 to be from 4.2 percent to 4.7 percent. While higher rates can cause affordability concerns, it’s important to recognize that mortgage interest rates below 5 percent would still be quite low by historical standards.
A final thought about 2018’s predictions and forecasts: The trends in the national housing market may or may not relate closely to local housing markets. This means that it is imperative to work with experienced individuals with lots of local expertise.
1. Housing Outlook 2018: 6 Predictions From The Experts. Samantha Sharf. Forbes.com 03 Jan. 2018. Web. https://www.forbes.com/sites/samanthasharf/2018/01/03/housing-outlook-2018-six-predictions-from-the-experts/#1cb2d8664066
2. Builders Confident as Market Primed to Expand in 2018. National Association of Homebuilders. NAHB.com. 18 Dec. 2018. Web. https://www.nahb.org/en/news-and-publications/press-releases/2017/12/builders-confident-as-market-primed-to-expand-in-2018.aspx
3. CoreLogic Reports Fourth Consecutive Month with More Than 6 Percent Year-Over-Year Home Price Growth in November. CoreLogic.com. New Release. 02 Jan 2018. Web. http://www.corelogic.com/about-us/news/corelogic-reports-fourth-consecutive-month-with-more-than-6-percent-year-over-year-home-price-growth-in-november.aspx
4. MBA Economic and Mortgage Finance Commentary: December 20, 2017. December 2017 Forecast Commentary. MBA.org. Web. https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary/economic-commentary-archives
- By The HMA Team,
May 08, 2018