SANTA CLARA, Calif.,
Nov. 29, 2017 /PRNewswire/ --
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 realtor.com®2018 National
Housing Forecast released today by the online real estate
information and services destination.
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," said Javier
Vivas, director of economic research for
realtor.com®. "Inventory increases will be felt in
higher priced segments after 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 pickup
|
Mortgage
rate
|
Average 4.6%
throughout the year and reach 5.0% (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%
|
Home ownership
rate
|
Stabilize at 63.9%
after bottom in Q2-2016
|
Five Housing Trends for 2018
1. Inventory expected to begin to
increase – In August, the U.S. housing market began to see
a higher than normal month-over-month deceleration in inventory
that has continued into fall. Based on this pattern,
realtor.com® projects U.S. year-over-year inventory
growth to tick up into positive territory by fall 2018, for the
first time since 2015. Inventory declines are expected to
decelerate slowly throughout the year, reaching a 4 percent
year-over-year decline in March before increasing in early fall,
after the peak home-buying months. Boston; Detroit; Kansas
City, Mo.; Nashville; and
Philadelphia are predicted to see
inventory recover first. The majority of this growth is expected in
the mid-to-upper tier price points, which includes U.S. homes
priced above $350,000. Recovery for
starter homes is expected to take longer because their levels were
significantly depleted by first time buyers.
2. Price appreciation expected to
slow – Home prices are forecasted to slow to 3.2 percent
growth year-over-year nationally, from an estimated increase of 5.5
percent in 2017. Most of the slowing will be felt in the
higher-priced segment as more available inventory in this price
range and a smaller pool of buyers forces sellers to price
competitively. Entry-level homes will continue to see price gains
due to the larger number of buyers that can afford them and more
limited homes available for sale in this price range.
3. Millennials anticipated to gain
market share in all home price segments –
Although millennials will continue to face challenges next year
with rising interest rates and home prices, they are on track to
gain mortgage market share in all price points, due to the sheer
size of the generation. Millennials could reach 43 percent of home
buyers taking out a mortgage by the end of 2018, up from an
estimated 40 percent in 2017. With the largest cohort of millennial
expected to turn 30 in 2020, their homeownership market share is
only expected to increase.
"Millennials are a driving force in today's housing market,"
added Vivas. "They already dominate lower price home mortgage and
are getting close to overtaking older generations for mid- and
upper-tier mortgages. While financially secure in general, their
debt to income ratios have started to increase as they compete for
higher priced homes."
4. Southern markets predicted
to lead in sales growth – Southern cities are anticipated
to beat the national average in home sales growth in 2018 with
Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C. leading the pack. Sales are
expected to grow by 6 percent or more in these markets, compared
with 2.5 percent nationally. The majority of this growth can be
attributed to healthy building levels combating the housing
shortage. With inventory growth just around the corner, these areas
are primed for sales gains in years to come.
5. Tax reform will be a major
wildcard – At the time of this forecast, both the House and
Senate had bills up for consideration, but neither had passed and
their impact was not included in the forecast for 2018 sales and
prices. Since then, the House has passed its tax bill and the
Senate bill is likely to be voted on soon. While the ultimate
impact of tax reform will depend on the details of the plan that is
finally adopted, both versions include provisions that are likely
to decrease incentives for mobility and reduce ownership tax
benefits. On the flip side, some taxpayers, including renters, are
likely to see tax cuts. While more disposable income for buyers is
positive for housing, the loss of tax benefits for owners could
lead to fewer sales and impact prices negatively over time with the
largest impact on markets with higher prices and incomes.
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 5.0 percent by the end of 2018 due to
stronger economic growth, inflationary pressure, and monetary
policy normalization in the year ahead.
Top 100 Largest
U.S. Metros Ranked by Forecasted 2018 Sales and Price
Growth
|
|
Rank
|
Metro
|
2018 Sales
Growth
|
2018 Price
Growth
|
1
|
Las
Vegas-Henderson-Paradise, Nev.
|
4.90
|
6.90
|
2
|
Dallas-Fort
Worth-Arlington, Texas
|
6.02
|
5.57
|
3
|
Deltona-Daytona
Beach-Ormond Beach, Fla.
|
5.47
|
6.00
|
4
|
Stockton-Lodi,
Calif.
|
4.55
|
6.43
|
5
|
Lakeland-Winter
Haven, Fla.
|
3.00
|
7.00
|
6
|
Salt Lake City,
Utah
|
4.62
|
4.50
|
7
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
5.98
|
3.02
|
8
|
Colorado Springs,
Colo
|
3.12
|
5.65
|
9
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
1.00
|
7.67
|
10
|
Tulsa,
Okla.
|
7.54
|
1.02
|
11
|
Seattle-Tacoma-Bellevue, Wash.
|
2.34
|
6.21
|
12
|
Spokane-Spokane
Valley, Wash.
|
3.50
|
4.97
|
13
|
Austin-Round Rock,
Texas
|
4.04
|
4.42
|
14
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
3.10
|
5.28
|
15
|
Little Rock-North
Little Rock-Conway, Ark.
|
7.00
|
1.37
|
16
|
Denver-Aurora-Lakewood, Colo.
|
1.75
|
6.54
|
17
|
Orlando-Kissimmee-Sanford, Fla.
|
1.24
|
6.88
|
18
|
Toledo,
Ohio
|
5.16
|
2.95
|
19
|
Columbia,
S.C.
|
5.07
|
3.00
|
20
|
Palm
Bay-Melbourne-Titusville, Fla.
|
1.00
|
7.00
|
21
|
Jacksonville,
Fla.
|
4.73
|
3.20
|
22
|
Durham-Chapel Hill,
N.C.
|
5.18
|
2.62
|
23
|
Providence-Warwick,
R.I.-Mass.
|
3.72
|
3.97
|
24
|
Akron,
Ohio
|
5.89
|
1.70
|
25
|
North
Port-Sarasota-Bradenton, Fla.
|
3.00
|
4.50
|
26
|
Chattanooga,
Tenn.-Ga.
|
3.50
|
4.00
|
27
|
Worcester,
Mass.-Conn.
|
3.77
|
3.68
|
28
|
Raleigh,
N.C.
|
1.63
|
5.77
|
29
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
1.38
|
6.00
|
30
|
Grand Rapids-Wyoming,
Mich.
|
2.96
|
4.25
|
31
|
Boise City,
Idaho
|
2.00
|
5.00
|
32
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
2.50
|
4.37
|
33
|
Greenville-Anderson-Mauldin, S.C.
|
2.80
|
4.00
|
34
|
Madison,
Wis.
|
1.72
|
5.05
|
35
|
Albuquerque,
N.M.
|
2.92
|
3.71
|
36
|
Houston-The
Woodlands-Sugar Land, Texas
|
2.24
|
4.19
|
37
|
Winston-Salem,
N.C.
|
3.00
|
3.21
|
38
|
Riverside-San
Bernardino-Ontario, Calif.
|
0.52
|
5.66
|
39
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
1.27
|
4.89
|
40
|
Fresno,
Calif.
|
1.29
|
4.81
|
41
|
San
Francisco-Oakland-Hayward, Calif.
|
0.94
|
5.14
|
42
|
Detroit-Warren-Dearborn, Mich.
|
1.17
|
4.77
|
43
|
Phoenix-Mesa-Scottsdale, Ariz.
|
3.66
|
2.26
|
44
|
Oxnard-Thousand
Oaks-Ventura, Calif.
|
2.29
|
3.62
|
45
|
Augusta-Richmond
County, Ga.-S.C.
|
2.50
|
3.34
|
46
|
Tucson,
Ariz.
|
3.00
|
2.71
|
47
|
San Diego-Carlsbad,
Calif.
|
2.51
|
3.19
|
48
|
Youngstown-Warren-Boardman, Ohio-Pa.
|
3.01
|
2.50
|
49
|
Harrisburg-Carlisle,
Pa.
|
2.50
|
3.00
|
50
|
Cleveland-Elyria,
Ohio
|
3.00
|
2.48
|
51
|
Birmingham-Hoover,
Ala.
|
3.00
|
2.42
|
52
|
McAllen-Edinburg-Mission, Texas
|
2.38
|
3.00
|
53
|
Charleston-North
Charleston, S.C.
|
3.64
|
1.69
|
54
|
New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
1.16
|
4.15
|
55
|
Jackson,
Miss.
|
0.00
|
5.30
|
56
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
1.40
|
3.82
|
57
|
Boston-Cambridge-Newton, Mass.-N.H.
|
2.55
|
2.64
|
58
|
Pittsburgh,
Pa.
|
3.53
|
1.62
|
59
|
Oklahoma City,
Okla.
|
1.49
|
3.51
|
60
|
Portland-South
Portland, Maine
|
5.00
|
0.00
|
61
|
Cape Coral-Fort
Myers, Fla
|
1.00
|
3.99
|
62
|
El Paso,
Texas
|
2.69
|
2.24
|
63
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
0.00
|
4.93
|
64
|
Knoxville,
Tenn.
|
2.00
|
2.92
|
65
|
Allentown-Bethlehem-Easton, Pa.-N.J.
|
4.12
|
0.57
|
66
|
Bakersfield,
Calif.
|
1.00
|
3.61
|
67
|
Urban Honolulu,
Hawaii
|
1.43
|
3.11
|
68
|
Des Moines-West Des
Moines, Iowa
|
3.20
|
1.19
|
69
|
Greensboro-High
Point, N.C.
|
1.34
|
2.97
|
70
|
Springfield,
Mass.
|
1.24
|
3.00
|
71
|
New Orleans-Metairie,
La.
|
2.00
|
2.24
|
72
|
Cincinnati,
Ohio-Ky.-Ind.
|
1.47
|
2.32
|
73
|
Wichita,
Ks.
|
2.23
|
1.49
|
74
|
Richmond,
Va.
|
2.68
|
1.02
|
75
|
Columbus,
Ohio
|
0.05
|
3.58
|
76
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
1.00
|
2.61
|
77
|
Rochester,
N.Y.
|
1.56
|
2.02
|
78
|
Hartford-West
Hartford-East Hartford, Conn.
|
4.46
|
(1.05)
|
79
|
Albany-Schenectady-Troy, N.Y.
|
0.75
|
2.55
|
80
|
Dayton,
Ohio
|
3.01
|
0.19
|
81
|
Memphis,
Tenn.-Miss.-Ark.
|
1.37
|
1.82
|
82
|
Scranton--Wilkes-Barre--Hazleton, Pa.
|
1.18
|
1.81
|
83
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
3.78
|
(1.04)
|
84
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
0.00
|
2.57
|
85
|
Syracuse,
N.Y.
|
0.00
|
2.57
|
86
|
Milwaukee-Waukesha-West Allis, Wis.
|
0.00
|
2.48
|
87
|
Baltimore-Columbia-Towson, Md.
|
0.48
|
1.82
|
88
|
New Haven-Milford,
Conn.
|
2.96
|
(0.67)
|
89
|
Washington-Arlington-Alexandria,
D.C.-Va.-Md-W.V.
|
0.00
|
2.25
|
90
|
Omaha-Council Bluffs,
Neb.-Iowa
|
0.00
|
2.18
|
91
|
Louisville/Jefferson
County, Ky.-Ind.
|
(2.74)
|
4.92
|
92
|
San Antonio-New
Braunfels, Texas
|
0.37
|
1.52
|
93
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
(3.48)
|
4.98
|
94
|
Baton Rouge,
La.
|
0.00
|
1.50
|
95
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
(1.88)
|
2.99
|
96
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
(2.10)
|
3.09
|
97
|
Indianapolis-Carmel-Anderson, Ind.
|
3.49
|
(2.53)
|
98
|
Kansas City,
Mo-Kan.
|
0.00
|
(0.12)
|
99
|
St. Louis,
Mo.-Ill.
|
0.00
|
(2.83)
|
100
|
Bridgeport-Stamford-Norwalk, Conn.
|
(0.35)
|
(2.87)
|
Realtor.com's model-based forecast uses data on the housing
market and overall economy to estimate values for these variables
for the year ahead. The forecast result is a projection for
annual total sales increase (total 2018 existing-home sales vs.
2017) and annual median price increase (2018 median existing-home
sales price vs. 2017).
About realtor.com®
Realtor.com® is the trusted resource for home buyers, sellers
and dreamers, offering the most comprehensive source of for-sale
properties, among competing national sites, and the information,
tools and professional expertise to help people move confidently
through every step of their home journey. It pioneered the world of
digital real estate 20 years ago, and today helps make all things
home simple, efficient and enjoyable. Realtor.com® is operated by
News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move,
Inc. under a perpetual license from the National Association of
REALTORS®. For more information, visit realtor.com®.
Media Contact:
Realtor.com®
Lexie Puckett Holbert –
lexie.puckett@move.com
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